Data Centre Boom Pushes India to Rethink Power Planning—Here’s Why

India’s power sector planning body is reassessing electricity demand amid concerns that a growing concentration of data centres in select states could distort consumption patterns and impact grid stability, according to Mint.

In addition, the Central Electricity Authority (CEA) is set to direct states and power distribution companies to factor in the projected power demand from data centres while preparing their resource adequacy plans, reported Mint. The data centre hubs are expected to lead to a surge in electricity demand, significantly changing the demand profile of the host states and possibly impacting grid stability.

Incorporating data centre-related electricity demand into state-level planning is aimed at ensuring adequate generation, storage and transmission capacity to meet future requirements.

By 2030, the Indian government hopes to bring in about $200bn in investments in data centers and AI infrastructure. Capacity is expected to grow from about 1.2 GW in 2025 to almost 10 GW by the end of the decade. Electricity use could rise from 10–15 terawatt hours (TWh) to 40–45 TWh.

To put in perspective, a terawatt hour represents the consumption of one trillion watts of electricity over one hour, according to Climate Collective Investing website.

Andhra Pradesh, Uttar Pradesh, Maharashtra, Telangana, Karnataka, and Tamil Nadu are all expected to get big data centers. Microsoft, Amazon, Alphabet, the Adani Group, Reliance Industries, the AM Group and Larsen and Toubro are all companies that have promised to put money into India's AI industry.

Grids Under Digital Pressure

The rising demand for data centres in India reflects the global trend of digital infrastructure becoming a major driver of electricity consumption. According to the International Energy Agency (IEA) report, data centres account for about 1.5% of global electricity consumption in 2024 and their demand is increasing rapidly due to the boom in artificial intelligence and cloud computing.

The IEA report further underscored that the global electricity consumption for data centres is projected to double to reach around 945 TWh by 2030 in the Base Case, representing just under 3% of total global electricity consumption in 2030.

From 2024 to 2030, data centre electricity consumption is expected to surge by around 15% per year, more than four times faster than the growth of total electricity consumption from all other sectors. However, in the wider context, a 3% share in 2030 means that data centre share in global electricity demand remains limited.