Key Highlights
- India’s data center capacity is projected to surge 77% by 2027.
- Data centers consume significant amounts of energy and water, posing environmental challenges.
- The sector is expected to receive investments worth $25-30 billion in capacity expansion by 2030.
- Water stress could become a critical issue for data center operations in India’s urban clusters.
Data Center Boom Drives Digital Growth in India
The rapid expansion of artificial intelligence (AI) and the global surge in digital demand have led to an unprecedented boom in data centers across India. According to projections, India’s data center capacity is set to grow by 77% by 2027, reaching a total capacity of 1.8 gigawatts (GW). This growth is being fueled by investments from tech giants such as Google, Amazon Web Services, and Meta, alongside local players like Reliance Industries.
These data centers play a crucial role in supporting the digital infrastructure necessary for various services including cloud computing, streaming media, AI applications, and more. Last month, Google announced an investment of $15 billion (£11.49 billion) in an AI data center in Andhra Pradesh, marking its largest investment in India to date.
Environmental Concerns Loom as Data Centers Consume Vast Resources
The significant growth in data centers presents both opportunities and challenges for India. On one hand, the sector is expected to drive economic development by attracting substantial investments and creating jobs. However, it also raises critical environmental concerns due to its high energy consumption and water usage.
India faces severe water stress, with 18% of the world’s population but only 4% of global water resources. The projected increase in data center water consumption from 150 billion liters in 2025 to 358 billion liters by 2030 could exacerbate existing water scarcity issues, particularly in urban areas like Mumbai, Hyderabad, Chennai, and Bengaluru.
Policy Makers Weigh Trade-offs Between Digital Growth and Environmental Sustainability
Policymakers must navigate the complex trade-offs between promoting digital growth through data centers and addressing environmental concerns. While data center development costs are relatively low in India compared to other countries, the potential for water stress poses significant risks.
Experts warn that high water stress could disrupt operations during peak summer months when cooling demands are highest. Advocacy groups like the Human Rights Forum have raised concerns about Google’s proposed data center in Visakhapatnam, highlighting the city’s acute water stress and potential intensification due to this investment. Such issues may lead to local resistance and regulatory pushback.
Innovative Solutions and Policy Adjustments Are Needed
To mitigate these challenges, experts suggest exploring innovative solutions such as using treated domestic and industrial wastewater for cooling purposes. Additionally, promoting the use of zero-water cooling technologies could reduce water consumption in data centers. India must also carefully select low-stress water basins for new projects.
While energy use is another significant concern, there are steps that can be taken to ensure more sustainable growth.
The International Energy Agency predicts a doubling of electricity consumption for data centers by 2030. Implementing regulations that mandate the use of renewable energy could help mitigate this impact.
As India strives to harness the benefits of digital transformation while addressing environmental concerns, policymakers and industry leaders must collaborate to find sustainable solutions. The challenge lies in ensuring that one good is not sacrificed for another—promoting digital growth without compromising on environmental sustainability.
