AI Data Centres and India’s Power Grid: Managing Rising Energy Demand

At the India AI Impact Summit 2026, India highlighted that AI-driven data centres are emerging as large, complex, and dynamic loads on modern grids  that could significantly reshape India’s power system.

• India’s total installed data centre capacity is about 1.2 GW, and is projected to grow fourfold by 2030 due to rising AI-driven computing demand.
  • Projections see penetration reaching 8–10 GW, making data centres significant grid loads.
• Data Centres as a Major Power Load: Unlike traditional loads, data centres are high-intensity, dynamic and variable electrical loads.
  • Their demand is less predictable, especially due to AI workloads that can cause sharp ramps up or down in usage. 

About Data Centres

• Data centres are dedicated facilities that house computer systems, servers, networking equipment, and storage systems to manage, store, and process vast volumes of digital data.
• Applications: They power cloud services, host websites, manage enterprise IT operations, support financial transactions, and enable real-time communication, AI processing, and big data analytics.

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Challenges for the Power Grid

• Grid Planning & Infrastructure: Data centres operate like large, complex transmission-level loads, requiring stronger grid planning than typical distribution systems.
• Silent Exits: Data centres with inverter-based setups can abruptly isolate themselves (“silent exit”), potentially disturbing grid balance if large power drops occur.
• Forecasting Difficulties: Traditional energy forecasting struggles with the dynamic load profile of AI and data centre power demand.
• Transmission Infrastructure Stress: Hyperscale data centres may require close to 1 GW per facility.

Way Forward

• Infrastructure & Policy Implications: India’s grid planning must evolve to handle high-load, uninterrupted energy requirements of large AI data centres.
  • For Example: Integration with renewables, energy storage, and regulatory alignment will be essential to ensure both reliability and sustainability. 
• Strengthening Grid Planning and Resource Adequacy: Incorporate data centre demand projections into national and state-level power planning under the National Electricity Plan (NEP) prepared by Central Electricity Authority.
• Creation of Data Centre Parks with Integrated Infrastructure: Develop plug-and-play data centre zones with pre-approved high-capacity transmission lines.
  • For Example: States like Maharashtra and Uttar Pradesh have announced dedicated data centre policies offering infrastructure incentives.
• Water and Environmental Sustainability: Mandate water-efficient cooling technologies (liquid cooling, air cooling).
  • For Example: Encourage siting data centres in regions with adequate water and transmission infrastructure.

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Conclusion

India’s data centre boom presents both a challenge and an opportunity. If growth is unplanned, it could lead to grid instability, tariff stress, and infrastructure chaos. 

• However, if strategically integrated, it can accelerate renewable energy adoption, drive innovations in energy storage, enhance transmission planning, and strengthen India’s global competitiveness in AI.

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