Opinion – What Will Power India’s Data Centre Boom? Why Clean Energy Must Be at the Core

India’s data centre capacity was ~637 MW in 2022, with ~45 new data centres (≈13 million sq ft / ~1,015 MW capacity) expected by end-2025. By 2030, data centre capacity in India is projected to exceed 4,500 MW, backed by US$20-25 billion of investment. The data centre market revenue in India is forecasted to grow from ≈ US$9.17 billion in 2024 to ≈ US$21.79 billion by 2030, at a CAGR of ~15.5%.

Data centres in India are projected to emit 7.29 million tonnes (Mt) of CO₂ in a moderate decarbonization scenario, rising to ~19.36 Mt by 2030. In states with many data centres like Maharashtra and Delhi NCR, reliance on fossil-fuel-generated power (coal etc.) is very high (78% in Maharashtra; ~85-90% in Delhi NCR), which amplifies CO₂ emissions. For India, which has pledged to achieve 500 GW of non-fossil electricity capacity by 2030 and net zero emissions by 2070, this is not an option. Clean energy, therefore, must be at the very core of the data centre boom.

Why BESS Matters for Data Centres

India’s grid is still heavily coal‐dependent. As data centre electricity demand rises, so does the carbon intensity of their operations unless powered by renewables. Data centres must maintain continuous operations. Any power disruption can lead to data loss, reputational risk, and financial loss. BESS (often lithium-ion or other advanced chemistry) offers near-instant backup, bridging the gap until generators kick in or the grid stabilizes. When the grid supply is constrained or electricity tariffs are high during peak demand, BESS helps by storing energy in off‐peak periods and releasing during peaks, thus reducing operational cost. This helps ease the load on distribution infrastructure and avoid or defer expensive grid upgrades.

As India pushes for higher renewable energy deployment (solar, wind), variability in supply is a challenge. BESS smooths out this variability, ensuring power quality for sensitive loads like data centres. Helps in reducing Scope 2 emissions (electricity purchased) and aligning operations with green / ESG standards. With policy enablers like “Green Open Access Rules” and waivers (like ISTS / interstate transmission charges), data centres can procure renewable power more affordably, especially when paired with energy storage.

Green Hydrogen Can Support India’s Data Centre Boom

Traditionally, backup is provided by diesel generators—but these emit CO₂, particulates, NOₓ, and are noisy. Green hydrogen fuel cells or hydrogen-powered prime generators can offer cleaner backup without or with far lower emissions. Integrating green hydrogen helps in reducing both direct and indirect emissions, aiding operators in achieving net-zero or carbon-neutral goals.

Green hydrogen systems, especially when co-located with data centres, can provide on-site power generation, reducing dependence on the grid and ensuring resilience during peak demand or grid stress. When renewable generation is intermittent, periods of excess power (or times when the grid supply isn’t enough) can be buffered via hydrogen production. Excess renewable power can be used to produce hydrogen, which is stored and later converted back into electricity through fuel cells, effectively acting as an energy storage buffer. When paired with Battery Energy Storage Systems (BESS), this hybrid combination creates a powerful zero-emission solution: BESS addresses instantaneous power needs and short-duration fluctuations, while hydrogen provides long-duration backup and energy security. Together, they can redefine the role of clean energy in India’s data centres, delivering both resilience and sustainability as the sector expands rapidly.

Way Forward

Energy demand is expected to more than double by 2030, fuelled by AI, cloud services, and 5G. Without intervention, data centres alone could be responsible for nearly 1% of India’s energy-related CO₂ emissions in the near future. In this critical moment, BESS (Battery Energy Storage Systems) and Green Hydrogen aren’t just alternatives; they are essential pillars. BESS offers the fast-response power buffering, peak shaving, and renewable integration needed to reduce dependence on coal-heavy grids. Green hydrogen, meanwhile, provides viable zero-emission backup and resilience against generator-based pollution. Together, they form the foundation for a data infrastructure that is not only high-powered but also high-purpose: sustainable, reliable, and aligned with India’s clean energy ambitions. To accelerate this transition, the Government could mandate green power adoption for data centres similar to earlier directives in the telecom sector, ensuring large-scale compliance. At the same time, private players can leverage this shift to strengthen their ESG commitments, demonstrating leadership in sustainability and responsible growth.