India’s Data Centre Expansion and the Climate Challenge

Context

India’s rapidly growing data centre industry is attracting significant investments and emerging as an important pillar of the digital economy. However, the expansion of this sector is also increasing demand for electricity, water and cooling, placing additional pressure on already stressed urban infrastructure and ecological resources.

Key Highlights

• India’s data centre capacity has expanded rapidly, with government estimates suggesting that the sector could attract nearly $200 billion in investment over the coming decade, strengthening its role in the country’s digital economy.
• Data centres are highly resource-intensive facilities. A 100 MW data centre can consume around 2 million litres of water per day, apart from requiring substantial electricity for computing and cooling operations.
• Data centre development is increasingly concentrated in areas already experiencing water scarcity, heat stress and electricity transmission constraints, raising concerns over competition for resources among households, agriculture and industries.
• Rising temperatures can create a reinforcing cycle of energy demand. Data centres generate considerable heat, while higher ambient temperatures increase the need for cooling, thereby raising electricity consumption and potentially increasing associated emissions.
• Policy approaches at the State level remain fragmented, with variations in renewable-energy requirements, water-use regulations, electricity-related incentives and environmental assessment procedures. This underlines the need for a coherent national sustainability framework for the sector.

Key Concepts

Data Centre Sustainability:
The approach of developing and operating digital infrastructure with emphasis on energy efficiency, renewable energy, water conservation, efficient cooling technologies and responsible resource management, rather than focusing solely on increasing computing capacity.

Climate-Intelligent Infrastructure:
Infrastructure planning that incorporates anticipated climate risks, such as heatwaves, water scarcity, extreme weather events and electricity-grid stress, into investment, design and operational decisions.

Way Forward

India should develop national benchmarks for energy and water efficiency, renewable energy procurement, cooling technologies and climate risk assessment for data centres. New facilities should preferably be located in regions with adequate access to clean energy and sustainable water resources. A coordinated policy framework can help India expand its digital infrastructure while ensuring that economic growth does not intensify existing climate and resource stresses.