Decarbonisation: ensuring efficiency in India's data centres

Demand for digital technologies and localised data storage is fuelling data centre construction in India. A further push from the government for more data centres is only heightening this. This underscores the need for a decarbonisation strategy to manage energy consumption and ensure efficient, resilient facilities.

India is emerging as a key competitor in the global digital economy, driving rapid digital transformation and outpacing countries such as Australia, Japan, Singapore and Hong Kong. India is a leading force in the Asia-Pacific data centre sector, propelled by digital adoption, government support and AI infrastructure investment. 

However, India faces a significant disparity in data centre capacity relative to its data production, producing 20 percent of the world’s data while accounting for just 3 percent of global data centre capacity. To bridge this gap and sustain the country’s digital growth, major global players like Microsoft and Google, along with local companies such as Sify Technologies and Arshiya, are focussed on expanding data centre capacity in established and new locations. 

The increasing global demand for digital capabilities has heightened the focus on energy consumption and the environmental impacts of data centres.

“In 2023, the sector consumed around 1.3 percent of global electricity supply – some 340 terawatt hours (TWh) and a figure that’s expected to rise to more than 1.6 percent by 2026.”

With only 22 percent of data centres LEED-certified, there’s clear potential for carbon reduction. Implementing a robust decarbonisation strategy can help meet low-carbon targets, improve cost-effectiveness and enhance operational resilience. 

Expanding data centre capacity with green energy 

India’s current construction activity is set to expand data centre capacity from 977MW to more than 1GW by 2028, with plans for an additional 1GW of expansion boosting the country’s total projected data centre capacity to over 3GW in three years. Government initiatives are fuelling this boom, including a US$1.25 bn investment in AI infrastructure in 2024. 

Mumbai remains the hotspot for construction in India, with build costs around US$6.6/watt according to our data centre cost index 2024. Emerging locations such as Hyderabad, Chennai, Delhi NCR and Pune are also attracting interest.  

“Reliable power availability is crucial for data centres due to their high energy consumption and need for a continuous 24/7 supply.”

India is therefore increasing its supply, prioritising renewable energy. It aims to almost double its 430GW capacity by 2030, and renewables are expected to account for two-thirds of the new supply. In 2024 alone, solar and wind installations added almost 210GW of capacity.  

Leading IT providers are actively contributing to clean energy initiatives. For instance, CtrlS Datacenters has announced plans to incorporate solar panels into its new facility at Chandanvelly Industrial Park near Hyderabad. Amazon has also declared plans to add three new wind farms to its existing 53 solar and wind projects across the country.  

Decarbonisation strategies for sustainable data centre growth 

Increasing clean energy consumption is one part of the puzzle, but decarbonisation strategies span beyond this. By implementing a comprehensive decarbonisation strategy, developers and investors can address concerns around energy efficiency and consumption, and maximise a project’s overall value.  

In adopting such an approach for data centre projects, investors and developers should at the earliest possible stage: 

Evaluate energy requirements

This begins with assessing power availability, future demand and cooling solutions. Given India’s high humidity and varying temperatures, cooling becomes the largest energy consumer in data centres after the servers, requiring significant water resources.  

Understand the whole carbon cost

Carbon accounting must go hand in hand with financial accounting. This includes considering the embodied carbon generated in the production, transportation and disposal of a data centre’s materials, components and systems.  

Quantifying emissions throughout design, construction, operation and disposal facilitates informed decision-making and drives more significant carbon reduction.  

Measure, monitor and improve

As IT systems and cooling technologies are the largest energy consumers in data centres, it’s essential to understand their efficiency by monitoring power usage effectiveness, cooling efficiency and server utilisation.  

By targeting and improving these metrics over time, you can unlock efficiencies and drive greater cost savings.

Be prepared to adopt innovation

In addition to adopting renewable energy technologies, leading data centre developers are exploring a range of innovations, from materials to design optimisation, modular building methods and adjusting workloads for efficiency. 

Innovation: shaping the future of data centres 

Innovation is integral to delivering energy-efficient data centres in their design, construction and operation, and for ensuring resilience to meet the future demands of consumers and businesses. Key areas of innovation include:  

Liquid cooling systems

Once reserved for supercomputers, liquid cooling systems are becoming mainstream. These can reduce cooling energy consumption by more than 18 percent compared to traditional air-cooling methods.  

Immersion liquid cooling and direct-to-chip cooling allow businesses to increase rack density, enabling more efficient use of space. 

Intelligent workload management

AI and other tools are increasingly being adopted to enable companies to achieve their sustainability goals while optimising resource usage, potentially leading to cost savings.  

Modular design and construction

Advanced construction approaches using modular and standardised designs, construction methods and components are enabling the construction industry to meet the rapidly evolving needs of the data centre sector.  

These approaches offer benefits in economies of scale, resulting in cost efficiencies, waste reduction, enhanced quality control and consistency in delivery. In the US, Microsoft is trialling the development of hybrid timber, steel and concrete data centres as part of its efforts to become carbon-negative by 2030. 

Taking action together: a call for industry collaboration 

We all have a responsibility to limit our environmental impact and sector leaders are showing how the data centre industry can decarbonise as it grows. Focusing on energy efficiency and future-proofing infrastructure is essential to meet market demand without compromising resilience or harming the planet. 

This requires a comprehensive strategy that prioritises low or no carbon objectives in data centre design, delivery and operation. With the right strategy in place, investors and developers can ensure a more sustainable future for their businesses and India’s digital transformation.