India’s clean power firms prepare for an AI-fuelled data center demand surge
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India is preparing to accommodate increased demand for renewable energy from data centers driven by artificial intelligence. The country's appeal is strengthened by challenges faced by data center operations in other regions. Investments in solar and wind capacity are crucial for supporting this burgeoning sector's needs. Major companies such as Meta, Google, and Apple are entering into supply contracts for renewable energy.
India’s renewable energy suppliers are poised for a surge in demand from data centers, as increasing backlash in the US and risks from the Middle East conflict drive operators to new markets.The green energy needed to power the infrastructure serving artificial intelligence is “massively underappreciated,” said Kuldeep Jain, managing director and founder of CleanMax Enviro Energy Solutions Ltd., a top renewables provider in the country.
Also Read: Asian countries, including India, must accelerate transition to renewable energy
“Even if just five gigawatts of data center capacity comes to India, which is a conservative estimate, you will need about 30-40 gigawatts of renewable power,” he said in an interview in Mumbai. “It’s a case of demand exceeding supply.”
India has been rolling out the red carpet for data center companies, offering power tariff subsidies, tax breaks, and easier land clearances. That’s made the country the top-ranked market for data center development in Asia-Pacific outside China, according to BloombergNEF.
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The country’s appeal as a destination for these firms has been boosted by public backlash in the US against their resource-guzzling facilities and by the risks they face from the threat of widening conflict in the Middle East, Jain said. Two of Amazon’s data centers were damaged by an Iranian strike in Bahrain in July.
Supporting such a rapid buildout will need billions of dollars in renewables and energy storage spending, Jain said. CleanMax is adding about 1.5 gigawatts of solar and wind capacity per year, with annual capital expenditure of up to 9,000 crore rupees ($950 million), he added.
“If you want to power a one gigawatt AI data cenere with 75% renewables, you need about three gigawatt of solar, three gigawatt of wind and about three gigawatt-hours of energy storage capacity,” Jain said. “This requires about Rs 40,000 crore ($4.8 billion) of capital expenditure just on the renewables side.”
Also Read: India proposes mandatory battery storage for new renewable projects from July 2027
The Brookfield Asset Management-backed company has already signed supply deals with several AI hyperscalers — companies that manage global networks of data centers — including Meta Platforms Inc, Alphabet Inc.’s Google, Apple Inc., and Amazon.com Inc. It will provide 1.8 gigawatts, accounting for roughly a third of all such contracts in India in the last three years.
Jain said AI hyperscalers are increasingly favoring flexible power contracts, where they have the option of buying only the environmental attributes of a renewable project to offset emissions, without requiring physical delivery of electricity to their facilities.
“They can take power directly to data centers or alternatively ask us to sell power in the exchanges and pay us for the difference between the guaranteed tariff and the realization on the exchange,” Jain said. “We’ve seen most hyperscalers prefer to retain this flexibility. It doesn’t matter for the seller, we get the same realization.”
Data centers with 1.3 gigawatts of IT capacity — that is, the power the facilities are designed to deliver to the computing equipment — are already under construction in India, according to BNEF. Another 3.2 gigawatts worth of projects have secured land, power and permits.
Energy consultancy Wood Mackenzie expects this number to reach 12 gigawatts by 2030, with AI-specific data center capacity jumping almost 24-fold to 6.5 gigawatts.
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