India’s $80 Bn Coal Push Risks Deepening Water Crisis Amid Rising Data Centre Demand

As India plans to spend nearly $80 billion coal-fired plants by 2031 to meet the energy demands of fast-growing industries like data centre operations, a looming water crisis may be impending. According to Reuters, most of the new projects — 37 out of 44 — are planned for India’s driest regions.

One of the key players, NTPC, which draws 98.5% of its water from water-stressed zones, is involved in nine of these projects. In response to questions from Reuters, NTPC said that it is "continuously striving towards conservation of water with best of our efforts in Solapur," including using methods like treating and reusing water. However, it did not answer queries about potential expansion plans.

Digital Backbone with a Growing Thirst

Data centres — essential to the digital economy — are driving much of this increased power demand. They house critical IT applications and and process the vast amounts of data we generate through apps, digital payments, and online streaming.

Water is essential not only for powering data centres but also for cooling their infrastructure. Maintaining server rooms at around 22 degrees Celsius requires huge volumes of water.

“Systems like evaporative cooling and chiller plants require continuous water supply to maintain optimal server temperatures,” Praveen Ramamurthy, Chair, Interdisciplinary Centre for Water Research, Indian Institute of Science (IISc) told ET.

Urban Centres Under Strain

Data centres in India are largely concentrated in some of its biggest cities already grappling with waters shortages, particularly this summer.

According to a 2021 study published in the journal Nature, a 1 MW data centre that reduces air temperature by cooling water can use around 25.5 million litres of water per year, equal to the daily water consumption of approximately 300,000 people.

Adding to the problem, many of the India’s data centres are located in cities that are already facing acute water stress. According to ET’s July 2024 report, over half the data centres are located in Mumbai and 15-18% in Chennai due to the proximity to submarine cable connectivity. Mumbai also has a significant presence of banking and finance sectors that are important customers of data centres. In a 2021 India: The Next Data Centre Hub report published by Nasscom, water shortage was indicated as a high-risk factor for data centres in Chennai, Bengaluru, Delhi and Hyderabad with moderate-to-high risk for Mumbai.

This dual development of coal expansion in dry areas and water needs of growing data consumption may put industry and local communities under stress over limited water resources. While energy expansion in crucial for India’s digital ambitions, sustainable water management is equally vital at this stage. To balance the demands of the digital economy with ecological stability, it must urgently address the water-energy nexus.