Reliable, cost-competitive power defining factor in india's data centre development: Wood Mackenzie Research
New Delhi, July 30
Reliable, round-the-clock power has become the "defining factor" in India's data centre development industry, replacing land and capital, according to a new Wood Mackenzie report, which projects the country's operational data centre capacity to grow from 2.2 GW in 2025 to 12 GW by 2030.
The report, India's Data Centre Landscape: Powering the Digital Economy, said India's operational data centre capacity is expected to rise from 2.2 GW in 2025 to 12 GW by 2030, driven by rapid growth in artificial intelligence (AI), hyperscale cloud investments and the country's expanding digital economy.
According to the report, access to reliable and affordable electricity now plays a bigger role in data centre development than the availability of land or capital.
"Reliable, cost-competitive power has become the defining factor in data centre development, overtaking land and capital as the industry's primary constraint," Wood Mackenzie said in the report.
"Land and capital are no longer the limiting factors for data centre developers in India. What determines site selection and delivery timelines now is access to firm, round-the-clock power at the node level," said Dr Rashika Gupta, Vice President of Research at Wood Mackenzie.
She added that developers securing power early through captive generation or long-term renewable power purchase agreements (PPAs) "will lock in a structural cost and sustainability advantage for the life of their assets."
The report estimates the sector will grow at a compound annual growth rate (CAGR) of around 40 per cent through 2030. It also expects AI-dedicated data centre capacity to surge nearly 24-fold during the period, increasing from 275 MW in 2025 to 6,546 MW by 2030 as demand for AI computing accelerates.
According to the report, data centre electricity demand is projected to rise from 10 terawatt-hours (TWh) in 2025 to 191 TWh by 2040, accounting for nearly 7 per cent of India's total electricity demand.
"India's data centre market becomes a structural investment thesis," said Souhardya Pal, Research Associate at Wood Mackenzie.
"The convergence of hyperscale capital, AI workload growth and a decade of policy support have created the conditions for India to rival any market in Asia-Pacific. The question for developers and investors is no longer whether to enter India, but where and how," he said.
The report said Maharashtra and Tamil Nadu currently account for around 65 per cent of the country's installed IT load, but future investments are expected to expand into Andhra Pradesh, Telangana, Uttar Pradesh and Karnataka.
It also identified water availability as an emerging investment risk, saying higher AI workloads are increasing cooling requirements and making water access an important factor in selecting locations for new facilities.
— ANI
Reader Comments
Fascinating analysis. The shift from land/capital constraints to power constraints makes total sense. India has the talent and policy support - now it's about infrastructure execution. Water availability being flagged as a risk is smart, especially for AI cooling.
Finally, Maharashtra and Tamil Nadu getting competition from other states! Andhra and UP should definitely grab this opportunity. But I hope the environmental impact assessments are done properly - these data centers guzzle water like anything.
My concern is whether our power distribution companies can handle this surge. We still have areas with erratic supply. The report says "firm, round-the-clock power" - that's not guaranteed everywhere in India yet. Need massive grid upgrades alongside data center construction.
40% CAGR till 2030? That's insane growth! India really is becoming the next big data center hub. The AI angle is especially exciting - 24x increase in AI capacity. But please, let's use this as a chance to lead in green data centers, not just follow the global trend. ☀️🔋
Impressive projections. The Wood Mackenzie team is quite credible. My worry is about cybersecurity - with so much data concentrated, we need world-class security protocols. Also, hope the state governments don't get into a bidding war offering unsustainable subsidies.
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