India's data centre capacity to double to 2,000 MW by 2026, green energy is the key

MUMBAI: India's data centre capacity is set to double to reach 2000 MW by 2026, as the country transitions towards a developed market economy amid a rise in 'green energy' solutions, a report showed on Wednesday.

The growth plans have also created substantial investment prospects, with a likely capex of Rs 50,000 crore in this space over the next three years till 2026, according to the report by CareEdge Ratings.

The data centre industry is expected to clock a revenue growth of 32 per cent during FY24-FY26.

While India generates about 20 per cent of global data, in terms of data centre capacity, it has a share of just 3 per cent.

However, the wave of digitisation, driven by the expansion of e-commerce, fintech platforms, online streaming, and gaming services, is anticipated to increase the number of internet users and boost internet penetration - generating a robust demand for data centres.

"The capacity addition of 1.1 GW in data centre space needs to be corroborated with increased absorption in future/medium term, as cashflow stability is an important consideration for the debt-funded investments," explained Puja Jalan, Associate Director, CareEdge Ratings.

In India, AdaniConneX aims to build an environmentally and socially conscious 1GW data centre infrastructure platform by leveraging the complementary capacity of the Adani Group and EdgeConneX, one of the largest private data centre operators.

Last month, AdaniConneX established the country's largest sustainability-linked financing to raise up to $1.44 billion.

According to the report, the adoption of technologies such as 5G, IoT, and artificial intelligence (AI) is expected to significantly augment demand for data and, in turn, data centres.

"Per MW cost in India for setting up data centres has witnessed escalation due to incremental land, equipment and other soft costs with new capacities now being set up at a cost of Rs 60-70 crore/MW," the report mentioned.