Adobe StockIndia Data Centres: Powering the 9 GW ambition amid grid constraints
How power scarcity and renewable mandates are redefining site selection in Mumbai, Bangalore, and emerging Tier 2 hubs
December 12, 2025Real Estate
Written by:Henrique Cisman
Executive Summary
India’s data centre industry is poised for exponential growth, with capacity projected to reach 9 GW by 2030, yet this ambition faces a critical hurdle in power availability. The strategic focus of site selection has fundamentally shifted from proximity to end-users to the assurance of reliable, sustainable energy. While Mumbai retains its status as the premier connectivity hub, its grid constraints and high costs are catalysing a market reconfiguration. Operators are increasingly diversifying into Chennai, Bangalore, and Hyderabad, driven by the necessity for scalable infrastructure. This transition marks the end of the commodity colocation era, ushering in a phase where power resilience, renewable energy integration, and long-term grid strategy distinguish the market leaders from the rest.
Key Takeaways
- Power availability has displaced fibre connectivity as the primary investment driver, prompting operators to look beyond Mumbai towards markets where scalable grid reliability better supports the immense demands of AI-driven workloads.
- Sustainability has evolved from a corporate goal into a rigid commercial mandate, compelling operators to satisfy both hyperscaler carbon neutrality targets and increasingly strict state-level regulations.
- The industry is consolidating around capital-intensive, self-sufficient campuses in peripheral locations to bypass urban congestion, favouring experienced operators capable of securing land and dedicated power infrastructure early.
India’s data centre industry stands at a critical inflection point. With capacity projected to surge from 1.4 GW in 2024 to potentially 9 GW by 2030, operators face increasingly complex decisions about where to establish their facilities.
At the heart of these decisions lies a fundamental challenge: power availability. For executives managing substantial asset portfolios and infrastructure investments, understanding the nuanced dynamics of site selection across India’s major metropolitan areas has become essential to successful market participation.
Mumbai, Chennai, Bangalore, Delhi NCR, and Hyderabad represent the five primary hubs for data centre development in India. Yet, each city presents distinct advantages and constraints that fundamentally reshape the investment calculus.
Power capacity - its reliability, scalability, and sustainability - has emerged as the single most critical variable in site selection, often surpassing traditional considerations like proximity to end-users or fibre connectivity.
This comprehensive analysis examines how operators navigate these complex trade-offs, with a particular emphasis on Mumbai’s unique position as India’s largest, but increasingly constrained, market.
The city’s dominance stems from multiple structural advantages: ten submarine cable landing stations providing exceptional international connectivity, concentrated demand from the banking, financial services, and insurance (BFSI) sector, and established infrastructure that has attracted hyperscale cloud service providers and enterprise clients alike.
However, this concentration of capacity creates significant challenges. Mumbai’s data centres currently consume approximately 250 MW of power - roughly 5% of the city’s peak electricity demand.
This concentrated load places substantial strain on the local grid, particularly in rapidly developing areas like Navi Mumbai, where multiple hyperscale campuses are under construction.
The city has over 4 GW of total data centre capacity planned, including operational, under-construction, and pipeline projects. Yet, this ambitious growth trajectory confronts fundamental questions about grid capacity and reliability.
Power constraints in Mumbai manifest in three critical dimensions. First, grid infrastructure stability remains a persistent concern. Despite Mumbai’s relatively mature electrical network, the concentration of high-density computing loads creates localised stress points that can affect power quality and reliability.
Data centre operators report an increasing need for robust backup systems - uninterruptible power supplies (UPS), battery energy storage systems (BESS), and diesel generators - to maintain the 99.99% uptime guarantees that enterprise clients demand.
Second, electricity tariffs in metropolitan Mumbai rank among the highest in India. Power represents 55-60% of operational expenditure for typical data centre facilities, making tariff structures a decisive factor in long-term financial modelling.
High urban power costs compel operators to pursue alternative energy procurement strategies, including renewable energy integration and behind-the-meter solutions, which add complexity to development timelines.
Third, approval and permitting processes for new power infrastructure can extend project schedules by 6-12 months. Securing dedicated power connections from 400 KV substations - increasingly necessary for hyperscale facilities designed to scale beyond 100 MW - requires navigating lengthy bureaucratic processes involving multiple state agencies.
For operators managing development pipelines worth billions of dollars, these delays translate directly into deferred returns and increased financing costs.
Strong submarine cable connectivity to Singapore, Southeast Asia, and beyond positions Chennai as a gateway for international traffic and makes it particularly attractive to Tier 2 cloud service providers seeking lower-cost alternatives to Mumbai.
From a power perspective, Chennai benefits from Tamil Nadu’s progressive renewable energy policies. The state has implemented specific incentives for data centre development, including augmented power supply commitments from Tamil Nadu Generation and Distribution Corporation (TANGEDCO) at multiple voltage levels (11 kV, 33 kV, 110 kV, and 220 kV). This flexibility in power provisioning enables operators to scale infrastructure more efficiently based on facility requirements.
However, Chennai faces its own constraints. Water scarcity presents a significant challenge for traditional cooling systems, particularly as AI workloads drive demand for higher rack densities.
The city experienced notable water stress in recent years, pushing operators towards alternative cooling technologies like recycled wastewater systems and direct liquid cooling.
Additionally, while Chennai’s power tariffs are competitive relative to Mumbai, electricity costs remain a substantial operational burden that shapes investment decisions.
Despite this concentration of digital activity, Bangalore accounts for a smaller share of India’s data centre capacity compared to Mumbai or Chennai - approximately 31 operational facilities with modest capacity expansion in recent years.
Karnataka’s data centre policy framework offers compelling incentives. The state ranks first in India for renewable energy capacity with 15 GW of installed generation, and government policies explicitly encourage green power sourcing for data centres.
Karnataka provides 100% electricity duty exemption for five years, along with land and stamp duty subsidies for facilities located outside the Bangalore Urban district - a deliberate strategy to encourage geographical decentralisation and reduce strain on metropolitan infrastructure.
Power reliability in Bangalore remains generally good, though the high concentration of IT infrastructure creates localised grid quality issues similar to those in Mumbai.
Operators typically design facilities with extensive redundancy, treating grid supply as one element of a diversified power strategy that includes renewable energy procurement, BESS integration, and backup generation.
The availability of large land parcels outside the urban core, combined with Karnataka’s renewable energy infrastructure, makes Bangalore particularly attractive for operators prioritising sustainability metrics and long-term operational cost optimisation.
Telangana’s data centre policy explicitly declares these facilities as "essential services," ensuring uninterrupted power supply and prioritised treatment during grid management decisions - a meaningful differentiation that provides operators with enhanced operational certainty.
The state offers substantial incentives, including capital investment support, power subsidies, and reductions in stamp duty and registration fees. Telangana’s policy framework aims to develop a complete value chain encompassing component manufacturing, data centre operations, and supporting services.
This holistic approach signals a long-term government commitment to sector development, reducing policy risk for investors planning multi-year buildouts.
Power consumption in Hyderabad’s IT corridor has grown by 35% annually in recent years, reflecting the rapid expansion of digital infrastructure. This growth creates both opportunities and challenges.
While demand demonstrates market vibrancy, the pace of capacity addition strains existing grid infrastructure.
Operators increasingly pursue renewable energy integration, with major players like CtrlS setting targets for 100% renewable power by 2030. Telangana’s strong solar and wind potential - combined with state incentives for renewable energy adoption - supports these ambitions.
At the heart of these decisions lies a fundamental challenge: power availability. For executives managing substantial asset portfolios and infrastructure investments, understanding the nuanced dynamics of site selection across India’s major metropolitan areas has become essential to successful market participation.
Mumbai, Chennai, Bangalore, Delhi NCR, and Hyderabad represent the five primary hubs for data centre development in India. Yet, each city presents distinct advantages and constraints that fundamentally reshape the investment calculus.
Power capacity - its reliability, scalability, and sustainability - has emerged as the single most critical variable in site selection, often surpassing traditional considerations like proximity to end-users or fibre connectivity.
This comprehensive analysis examines how operators navigate these complex trade-offs, with a particular emphasis on Mumbai’s unique position as India’s largest, but increasingly constrained, market.
The Power Challenge: Why Mumbai Dominates Despite Growing Constraints
Mumbai has established itself as India’s uncontested data centre leader, accounting for approximately 536 MW of colocation capacity as of 2024 - representing over 54% of the nation’s total operational capacity.The city’s dominance stems from multiple structural advantages: ten submarine cable landing stations providing exceptional international connectivity, concentrated demand from the banking, financial services, and insurance (BFSI) sector, and established infrastructure that has attracted hyperscale cloud service providers and enterprise clients alike.
However, this concentration of capacity creates significant challenges. Mumbai’s data centres currently consume approximately 250 MW of power - roughly 5% of the city’s peak electricity demand.
This concentrated load places substantial strain on the local grid, particularly in rapidly developing areas like Navi Mumbai, where multiple hyperscale campuses are under construction.
The city has over 4 GW of total data centre capacity planned, including operational, under-construction, and pipeline projects. Yet, this ambitious growth trajectory confronts fundamental questions about grid capacity and reliability.
Power constraints in Mumbai manifest in three critical dimensions. First, grid infrastructure stability remains a persistent concern. Despite Mumbai’s relatively mature electrical network, the concentration of high-density computing loads creates localised stress points that can affect power quality and reliability.
Data centre operators report an increasing need for robust backup systems - uninterruptible power supplies (UPS), battery energy storage systems (BESS), and diesel generators - to maintain the 99.99% uptime guarantees that enterprise clients demand.
Second, electricity tariffs in metropolitan Mumbai rank among the highest in India. Power represents 55-60% of operational expenditure for typical data centre facilities, making tariff structures a decisive factor in long-term financial modelling.
High urban power costs compel operators to pursue alternative energy procurement strategies, including renewable energy integration and behind-the-meter solutions, which add complexity to development timelines.
Third, approval and permitting processes for new power infrastructure can extend project schedules by 6-12 months. Securing dedicated power connections from 400 KV substations - increasingly necessary for hyperscale facilities designed to scale beyond 100 MW - requires navigating lengthy bureaucratic processes involving multiple state agencies.
For operators managing development pipelines worth billions of dollars, these delays translate directly into deferred returns and increased financing costs.
Navigate India’s digital revolution alongside the sector’s top decision-makers at the Grand Hyatt Mumbai for GRI Data Centre India 2026 on 10th February. (GRI Institute)
Comparative Evaluation: How Other Major Cities Stack Up
Chennai: The Connectivity Alternative
Chennai has emerged as India’s second-largest data centre market with approximately 113 MW of operational colocation capacity. The city’s strategic advantage lies primarily in connectivity infrastructure.Strong submarine cable connectivity to Singapore, Southeast Asia, and beyond positions Chennai as a gateway for international traffic and makes it particularly attractive to Tier 2 cloud service providers seeking lower-cost alternatives to Mumbai.
From a power perspective, Chennai benefits from Tamil Nadu’s progressive renewable energy policies. The state has implemented specific incentives for data centre development, including augmented power supply commitments from Tamil Nadu Generation and Distribution Corporation (TANGEDCO) at multiple voltage levels (11 kV, 33 kV, 110 kV, and 220 kV). This flexibility in power provisioning enables operators to scale infrastructure more efficiently based on facility requirements.
However, Chennai faces its own constraints. Water scarcity presents a significant challenge for traditional cooling systems, particularly as AI workloads drive demand for higher rack densities.
The city experienced notable water stress in recent years, pushing operators towards alternative cooling technologies like recycled wastewater systems and direct liquid cooling.
Additionally, while Chennai’s power tariffs are competitive relative to Mumbai, electricity costs remain a substantial operational burden that shapes investment decisions.
Bangalore: The Technology Hub Balancing Capacity and Efficiency
Bangalore (Bengaluru) represents India’s technology capital, with an extensive presence of IT/ITeS companies, R&D laboratories, and multinational technology corporations.Despite this concentration of digital activity, Bangalore accounts for a smaller share of India’s data centre capacity compared to Mumbai or Chennai - approximately 31 operational facilities with modest capacity expansion in recent years.
Karnataka’s data centre policy framework offers compelling incentives. The state ranks first in India for renewable energy capacity with 15 GW of installed generation, and government policies explicitly encourage green power sourcing for data centres.
Karnataka provides 100% electricity duty exemption for five years, along with land and stamp duty subsidies for facilities located outside the Bangalore Urban district - a deliberate strategy to encourage geographical decentralisation and reduce strain on metropolitan infrastructure.
Power reliability in Bangalore remains generally good, though the high concentration of IT infrastructure creates localised grid quality issues similar to those in Mumbai.
Operators typically design facilities with extensive redundancy, treating grid supply as one element of a diversified power strategy that includes renewable energy procurement, BESS integration, and backup generation.
The availability of large land parcels outside the urban core, combined with Karnataka’s renewable energy infrastructure, makes Bangalore particularly attractive for operators prioritising sustainability metrics and long-term operational cost optimisation.
Hyderabad: The Emerging Alternative with Policy Support
Hyderabad has positioned itself as a rapidly growing data centre hub, with 33 operational facilities representing approximately 7% of India’s total capacity.Telangana’s data centre policy explicitly declares these facilities as "essential services," ensuring uninterrupted power supply and prioritised treatment during grid management decisions - a meaningful differentiation that provides operators with enhanced operational certainty.
The state offers substantial incentives, including capital investment support, power subsidies, and reductions in stamp duty and registration fees. Telangana’s policy framework aims to develop a complete value chain encompassing component manufacturing, data centre operations, and supporting services.
This holistic approach signals a long-term government commitment to sector development, reducing policy risk for investors planning multi-year buildouts.
Power consumption in Hyderabad’s IT corridor has grown by 35% annually in recent years, reflecting the rapid expansion of digital infrastructure. This growth creates both opportunities and challenges.
While demand demonstrates market vibrancy, the pace of capacity addition strains existing grid infrastructure.
Operators increasingly pursue renewable energy integration, with major players like CtrlS setting targets for 100% renewable power by 2030. Telangana’s strong solar and wind potential - combined with state incentives for renewable energy adoption - supports these ambitions.
With India’s data centre capacity projected to hit 9 GW by 2030, power availability now outweighs connectivity as the defining investment driver. (Freepik)
Delhi NCR: Strategic Location Amid Infrastructure Pressures
The National Capital Region encompasses Delhi, Noida, Gurgaon, and surrounding areas, collectively hosting 31 data centre facilities. Delhi NCR’s primary advantage lies in strategic positioning as the political capital and a major business hub, ensuring proximity to government clients, enterprises, and decision-makers across sectors.
Power infrastructure in Delhi NCR faces similar constraints to Mumbai: high electricity tariffs, grid reliability concerns in some submarkets, and lengthy approval processes for large-capacity connections.
However, Delhi NCR benefits from policies in multiple jurisdictions (Delhi, Uttar Pradesh, and Haryana) that compete to attract data centre investments. This competitive dynamic has generated relatively favourable incentive packages, including land subsidies and streamlined approvals for qualifying projects.
Operators evaluating Delhi NCR typically emphasise customer proximity and market access over absolute power cost advantages. The region’s mature telecom infrastructure, multiple fibre routes, and established business ecosystem make it viable for enterprise-focused facilities, colocation providers serving diverse client bases, and edge computing deployments requiring proximity to end-users in North India.
The Site Selection Framework: A Systematic Evaluation Methodology
Leading data centre operators employ sophisticated, multi-criteria frameworks to evaluate site selection across Indian cities. While specific methodologies vary by organisation, most assessment processes incorporate seven core dimensions:
Power Infrastructure and Reliability
Power evaluation begins with grid capacity assessment—determining whether local transmission and distribution infrastructure can support planned loads both at launch and through multiple expansion phases. Operators analyse voltage levels, physical substation proximity, available capacity on existing feeders, and the utility’s track record for reliability metrics, including the System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI).
Critically, operators increasingly evaluate "behind-the-meter" capabilities: the ability to self-generate or procure power independently of grid supply. This includes assessing land availability for on-site solar installations, proximity to wind energy resources, potential for dedicated power purchase agreements (PPAs) with renewable generators, and space for BESS deployments that can provide both backup power and demand management capabilities.
Critically, operators increasingly evaluate "behind-the-meter" capabilities: the ability to self-generate or procure power independently of grid supply. This includes assessing land availability for on-site solar installations, proximity to wind energy resources, potential for dedicated power purchase agreements (PPAs) with renewable generators, and space for BESS deployments that can provide both backup power and demand management capabilities.
Connectivity and Network Infrastructure
Despite power’s primacy in current evaluations, connectivity remains foundational. Operators map available fibre routes from multiple carriers, proximity to Internet Exchange Points (IXPs), latency to major cloud hubs and end-user population centres, and access to submarine cable landing stations for international traffic.
Mumbai’s ten cable landing stations provide unmatched international connectivity, crucial for hyperscalers serving global client bases. Chennai’s submarine cable connections to Southeast Asia offer similar advantages for specific traffic patterns.
Other cities rely more heavily on terrestrial fibre networks, which can introduce single points of failure or increase latency for international workloads.
Mumbai’s ten cable landing stations provide unmatched international connectivity, crucial for hyperscalers serving global client bases. Chennai’s submarine cable connections to Southeast Asia offer similar advantages for specific traffic patterns.
Other cities rely more heavily on terrestrial fibre networks, which can introduce single points of failure or increase latency for international workloads.
Land Availability and Scalability
Modern hyperscale facilities increasingly require 20+ acre campuses to accommodate staged build-outs potentially exceeding 250 MW at full deployment. Operators evaluate land availability at scale, acquisition costs, zoning regulations, setback requirements, and soil conditions that affect foundation design for heavily loaded structures.
The shift towards campus developments reflects both operational efficiency (shared infrastructure, economies of scale) and power strategy (space for on-site renewable generation and BESS).
Mumbai’s land scarcity and high costs increasingly push large-scale developments to peripheral areas like Navi Mumbai and beyond, while cities like Bangalore and Hyderabad offer more abundant land options at competitive prices.
The shift towards campus developments reflects both operational efficiency (shared infrastructure, economies of scale) and power strategy (space for on-site renewable generation and BESS).
Mumbai’s land scarcity and high costs increasingly push large-scale developments to peripheral areas like Navi Mumbai and beyond, while cities like Bangalore and Hyderabad offer more abundant land options at competitive prices.
Regulatory Environment and Incentives
India’s data centre policy landscape remains fragmented across states, creating complexity for operators planning multi-market portfolios. Leading operators maintain detailed scorecards comparing regulatory frameworks across jurisdictions, evaluating:
- Financial incentives: Electricity duty exemptions, stamp duty reductions, capital investment support, and land subsidies.
- Approval processes: Single-window clearance systems, typical timelines for permits and connections, transparency, and predictability of regulatory interactions.
- Policy stability: Track records of policy continuity across political cycles, government commitment to sector development, and alignment with national digital infrastructure priorities.
Maharashtra, Karnataka, Telangana, and Tamil Nadu have emerged as policy leaders, each offering differentiated incentive packages designed to attract specific types of investments.
Operators carefully model the net present value impact of these incentives, particularly electricity cost offsets that can significantly improve project economics over 20+ year facility lifecycles.
Operators carefully model the net present value impact of these incentives, particularly electricity cost offsets that can significantly improve project economics over 20+ year facility lifecycles.
Natural Disaster Risk and Geographic Stability
India’s geographic diversity creates varied risk profiles across regions. Operators conduct comprehensive assessments of natural disaster exposure, including:
- Seismic activity and earthquake risk (particularly relevant for Northern regions).
- Flooding potential and monsoon drainage patterns.
- Cyclone exposure for coastal locations.
- Water availability and drought resilience.
Mumbai and Chennai face coastal cyclone risks, while Delhi NCR contends with seismic considerations. Bangalore and Hyderabad offer relatively benign natural disaster profiles, though water scarcity affects Chennai and certain periods in Bangalore.
These factors influence facility design (structural reinforcement requirements), insurance costs, and client perceptions of business continuity risk.
These factors influence facility design (structural reinforcement requirements), insurance costs, and client perceptions of business continuity risk.
Talent Availability and Labour Markets
Data centres require skilled labour for both construction and ongoing operations. Operators evaluate local talent pools, including electrical and mechanical engineers, facilities management professionals, and IT specialists.
Bangalore’s deep technology ecosystem provides unmatched access to skilled talent, while other metros offer varying capability levels.
Labour cost differentials can be substantial, with Tier 2 city salaries potentially 20-30% lower than Bangalore or Mumbai rates. For facilities with large operational teams, these cost differences meaningfully impact long-term P&L modelling.
Bangalore’s deep technology ecosystem provides unmatched access to skilled talent, while other metros offer varying capability levels.
Labour cost differentials can be substantial, with Tier 2 city salaries potentially 20-30% lower than Bangalore or Mumbai rates. For facilities with large operational teams, these cost differences meaningfully impact long-term P&L modelling.
Client Proximity and Market Demand
While edge computing and ultra-low latency applications require proximity to end-users, many workloads tolerate 10-50 milliseconds of latency, enabling geographic flexibility.
Operators segment demand by latency sensitivity: BFSI applications requiring sub-5ms latency necessitate a presence in Mumbai, while bulk storage, content distribution, and back-office workloads can be located anywhere with reliable connectivity.
Market concentration also factors into the evaluation. Mumbai’s dominance in financial services creates deep demand pools that support sustained absorption of new capacity.
Smaller markets may offer attractive economics but require longer lease-up periods and more diverse tenant bases to achieve stabilisation.
Operators segment demand by latency sensitivity: BFSI applications requiring sub-5ms latency necessitate a presence in Mumbai, while bulk storage, content distribution, and back-office workloads can be located anywhere with reliable connectivity.
Market concentration also factors into the evaluation. Mumbai’s dominance in financial services creates deep demand pools that support sustained absorption of new capacity.
Smaller markets may offer attractive economics but require longer lease-up periods and more diverse tenant bases to achieve stabilisation.
Join industry leaders from Equinix, Colt, Sify, and Yotta at GRI Data Centre India 2026 on 10th February in Mumbai. (GRI Institute)
The Renewable Energy Imperative: Reshaping Power Strategy
Sustainability considerations have evolved from aspirational goals to core business requirements. Three forces drive this transformation:
First, hyperscale cloud providers - who represent the largest and fastest-growing segment of data centre demand - have made aggressive commitments to carbon neutrality, often targeting 100% renewable energy by 2030 or earlier.
These commitments cascade through supply chains, with cloud providers requiring colocation partners and built-to-suit developers to demonstrate credible renewable energy strategies.
Second, regulatory pressure is intensifying. Maharashtra’s Green Integrated Data Centre Park policy explicitly requires 100% renewable energy supply for new campus developments.
Other states are implementing similar requirements or providing substantial incentives for voluntary adoption. The trajectory clearly points towards stricter mandates over the next 5-10 years.
Third, renewable energy economics increasingly favour adoption independent of regulatory requirements. Solar and wind power purchase agreements (PPAs) in India can provide long-term price certainty below grid power costs, particularly in high-tariff urban markets like Mumbai.
When combined with BESS systems that enable demand management and backup power capabilities, renewables become financially attractive beyond their sustainability benefits.
This shift fundamentally affects site selection in several ways:
First, hyperscale cloud providers - who represent the largest and fastest-growing segment of data centre demand - have made aggressive commitments to carbon neutrality, often targeting 100% renewable energy by 2030 or earlier.
These commitments cascade through supply chains, with cloud providers requiring colocation partners and built-to-suit developers to demonstrate credible renewable energy strategies.
Second, regulatory pressure is intensifying. Maharashtra’s Green Integrated Data Centre Park policy explicitly requires 100% renewable energy supply for new campus developments.
Other states are implementing similar requirements or providing substantial incentives for voluntary adoption. The trajectory clearly points towards stricter mandates over the next 5-10 years.
Third, renewable energy economics increasingly favour adoption independent of regulatory requirements. Solar and wind power purchase agreements (PPAs) in India can provide long-term price certainty below grid power costs, particularly in high-tariff urban markets like Mumbai.
When combined with BESS systems that enable demand management and backup power capabilities, renewables become financially attractive beyond their sustainability benefits.
This shift fundamentally affects site selection in several ways:
Land requirements expand significantly
Achieving high renewable energy percentages typically requires dedicated on-site solar installations consuming multiple acres, plus space for containerised BESS units. This expansion drives facilities towards larger campuses, favouring locations with available land at reasonable costs.
Proximity to renewable resources becomes strategic
Karnataka’s leadership in wind and solar capacity makes Bangalore-area sites particularly attractive for operators pursuing aggressive renewable targets. Telangana and Tamil Nadu offer similar advantages. Mumbai’s limited land availability for on-site generation pushes operators towards off-site PPAs, increasing complexity and potentially limiting renewable percentages.
Grid interconnection considerations evolve
Integrating significant on-site generation requires sophisticated grid interconnection arrangements, including export capability for excess generation, technical requirements for inverters and metering, and alignment with utility protocols. These technical requirements vary substantially across states and distribution companies, affecting project feasibility and timelines.
Power Capacity Constraints: Quantifying the Challenge
The scale of India’s data centre power challenge becomes clear through forward-looking projections. If capacity reaches 9 GW by 2030, as some forecasts suggest, data centres would consume approximately 2.6% of India’s total electricity - up from less than 1% today. Single large facilities can draw 100+ MW, equivalent to the power consumption of 100,000 homes.
This concentrated demand creates localised stress on transmission and distribution networks designed for more dispersed loads. Mumbai’s existing 4+ GW pipeline, if fully realised, would require power equivalent to a substantial portion of the city’s total generating capacity. While these facilities will deploy on-site generation and renewable procurement to reduce grid dependence, the infrastructure requirements remain formidable.
Operators increasingly report that power availability - not customer demand or capital availability - represents the binding constraint on expansion plans. Development teams speak of "capacity reserved" with utilities, treating power commitments as scarce resources to be secured early in project planning, often before land acquisition.
This scarcity dynamic shapes competitive positioning. Operators with existing sites and established utility relationships can expand capacity more readily than new entrants. Incumbents with strong balance sheets can commit to large capacity reservations, effectively locking out competitors in constrained markets. The result is industry consolidation, with scale players gaining advantage through their ability to navigate power constraints.
This concentrated demand creates localised stress on transmission and distribution networks designed for more dispersed loads. Mumbai’s existing 4+ GW pipeline, if fully realised, would require power equivalent to a substantial portion of the city’s total generating capacity. While these facilities will deploy on-site generation and renewable procurement to reduce grid dependence, the infrastructure requirements remain formidable.
Operators increasingly report that power availability - not customer demand or capital availability - represents the binding constraint on expansion plans. Development teams speak of "capacity reserved" with utilities, treating power commitments as scarce resources to be secured early in project planning, often before land acquisition.
This scarcity dynamic shapes competitive positioning. Operators with existing sites and established utility relationships can expand capacity more readily than new entrants. Incumbents with strong balance sheets can commit to large capacity reservations, effectively locking out competitors in constrained markets. The result is industry consolidation, with scale players gaining advantage through their ability to navigate power constraints.
Emerging Strategies: How Operators Adapt to Constraints
Leading operators deploy several strategies to mitigate power capacity constraints:
Geographic Diversification
Rather than concentrating all capacity in Mumbai, operators spread investments across multiple metros. This diversification provides flexibility to pursue opportunities where power is most readily available, reduces exposure to localised regulatory changes or natural disasters, and aligns with customer desires for geographic redundancy.
JLL Research projects that India will add 795 MW of new capacity by the end of 2027, taking total capacity to 1,825 MW. This growth will be distributed across markets, with Mumbai’s share of new additions declining relative to Chennai, Bangalore, Hyderabad, and emerging locations.
JLL Research projects that India will add 795 MW of new capacity by the end of 2027, taking total capacity to 1,825 MW. This growth will be distributed across markets, with Mumbai’s share of new additions declining relative to Chennai, Bangalore, Hyderabad, and emerging locations.
Tier 2 City Exploration
Power constraints in primary metros increasingly drive interest in Tier 2 cities, including Pune, Kolkata, Ahmedabad, and others. These markets offer lower power costs, less constrained grid capacity, more available land, and substantial government incentives designed to attract digital infrastructure.
Pune witnessed 15 MW of supply additions in H2 2024, driven by cloud service provider commitments. Kolkata saw fresh supply addition after many years with 2 MW of pre-committed demand delivered. These markets remain small relative to top-tier cities but represent growth vectors as primary markets constrain.
Pune witnessed 15 MW of supply additions in H2 2024, driven by cloud service provider commitments. Kolkata saw fresh supply addition after many years with 2 MW of pre-committed demand delivered. These markets remain small relative to top-tier cities but represent growth vectors as primary markets constrain.
Integrated Energy Solutions
Sophisticated operators increasingly approach power as an integrated solution rather than simple grid procurement. This integration combines multiple elements:
- On-site solar generation sized to cover 20-40% of facility load during daylight hours.
- BESS systems providing 2-4 hours of backup power while enabling demand management and peak shaving.
- Long-term renewable PPAs for off-site wind or solar generation, potentially including "round-the-clock" renewable contracts that combine wind and solar with BESS to provide 24/7 clean power.
- Grid connectivity maintained for reliability and to export excess generation.
- Backup diesel generators as an ultimate reliability backstop.
This multi-layered approach increases capital intensity but delivers superior reliability, lower operating costs, and better sustainability metrics than traditional grid-only models.
Modular Development and Phased Expansion
Rather than building facilities to full capacity upfront, operators increasingly pursue modular designs enabling phased expansion aligned with customer commitments and power availability. A 40 MW facility might launch with 10 MW of equipped space and reserve power capacity, expanding in 5-10 MW increments as absorption warrants.
This approach reduces upfront capital requirements, aligns investment with proven demand, and provides flexibility to incorporate technology improvements in later phases. It also enables operators to secure large land parcels and power reservations while staging actual construction to match market conditions.
This approach reduces upfront capital requirements, aligns investment with proven demand, and provides flexibility to incorporate technology improvements in later phases. It also enables operators to secure large land parcels and power reservations while staging actual construction to match market conditions.
The Investment Perspective: Implications for Infrastructure Capital
For institutional investors and infrastructure funds allocating capital to India’s data centre sector, power capacity dynamics create both risks and opportunities.
The GRI Institute’s global network of real estate and infrastructure leaders increasingly focuses on these considerations as they evaluate market entry and portfolio expansion strategies.
Risk factors include regulatory uncertainty around renewable mandates, potential for grid infrastructure delays to extend project timelines, and the possibility that power constraints could limit market growth below current projections.
Climate risks - including water scarcity affecting cooling systems and extreme weather events stressing power networks - add additional complexity.
Opportunity factors centre on market fundamentals that remain compelling despite power challenges. India’s digital economy continues rapid growth, enterprise cloud adoption accelerates, and government digital initiatives drive data localisation requirements.
These demand drivers underpin long-term absorption expectations that justify infrastructure investment despite execution complexity.
The ability to navigate power constraints becomes a source of competitive advantage and a barrier to entry. Operators with deep utility relationships, expertise in renewable energy integration, and access to large capital pools to finance integrated power solutions can achieve superior returns, while smaller players struggle to compete.
This dynamic favours institutional capital partnering with experienced operators who have demonstrated capability across market cycles.
The GRI Institute’s global network of real estate and infrastructure leaders increasingly focuses on these considerations as they evaluate market entry and portfolio expansion strategies.
Risk factors include regulatory uncertainty around renewable mandates, potential for grid infrastructure delays to extend project timelines, and the possibility that power constraints could limit market growth below current projections.
Climate risks - including water scarcity affecting cooling systems and extreme weather events stressing power networks - add additional complexity.
Opportunity factors centre on market fundamentals that remain compelling despite power challenges. India’s digital economy continues rapid growth, enterprise cloud adoption accelerates, and government digital initiatives drive data localisation requirements.
These demand drivers underpin long-term absorption expectations that justify infrastructure investment despite execution complexity.
The ability to navigate power constraints becomes a source of competitive advantage and a barrier to entry. Operators with deep utility relationships, expertise in renewable energy integration, and access to large capital pools to finance integrated power solutions can achieve superior returns, while smaller players struggle to compete.
This dynamic favours institutional capital partnering with experienced operators who have demonstrated capability across market cycles.
Strategic Implications: Positioning for the Next Decade
As India’s data centre industry scales towards multi-GW capacity, several strategic themes emerge for operators and investors:
Mumbai’s evolution from dominance to co-leadership
While Mumbai will remain critical for latency-sensitive applications and international connectivity, its share of new capacity will likely decline as operators diversify to other metros. The city’s role evolves towards premium positioning for mission-critical applications rather than commodity colocation.
Rise of integrated campuses
The power-land-sustainability nexus increasingly favours large integrated campuses (20+ acres, 100+ MW potential capacity) that can accommodate on-site renewable generation and BESS at scale. This shift disadvantages smaller, urban facilities lacking expansion capacity.
Policy arbitrage opportunities
Substantial variation in state-level policies creates opportunities for operators who can match facility characteristics to optimal regulatory environments. Facilities prioritising cost optimisation might favour states with the strongest incentives, while those emphasising client proximity accept higher costs in primary metros.
Sustainability as a competitive differentiator
The ability to deliver credible 100% renewable energy solutions transitions from a "nice-to-have" to a competitive requirement, particularly for hyperscale customers. Operators who develop genuine expertise in renewable integration - rather than simply purchasing offsets - will capture premium market share.
Technology adoption acceleration
Power constraints accelerate the adoption of efficiency technologies, including liquid cooling, advanced UPS systems, and AI-based power management. These technologies require higher upfront investment but deliver substantially better operating economics, particularly in constrained power environments.
Conclusion: Power as a Strategic Determinant
The question of where to locate data centre capacity in India has fundamentally shifted from "where are customers?" to "where can we secure reliable, scalable, affordable power?" This transformation reflects the maturation of India’s digital infrastructure, the explosive growth in computing demand driven by artificial intelligence, and the physical constraints of urban power networks designed for more distributed loads.
Mumbai’s continued leadership demonstrates that superior connectivity and market access can justify power complexity and cost premiums - but only to a point.
The emergence of Chennai, Bangalore, Hyderabad, and Delhi NCR as viable alternatives reflects operators’ pragmatic assessment that power constraints increasingly outweigh locational advantages, particularly for workloads tolerant of moderate latency.
For the real estate and infrastructure leaders who comprise the GRI Institute’s global community - professionals managing USD 20 trillion in assets across diverse markets - India’s data centre evolution offers valuable lessons applicable beyond a single sector or geography.
The interplay of infrastructure constraints, regulatory policy, sustainability imperatives, and technological change visible in India’s data centre market previews dynamics that will shape built environment investment globally over the coming decade.
The operators and investors who thrive in India’s next phase of data centre growth will be those who view power not as a commodity input but as a strategic asset requiring sophisticated sourcing, integrated renewable solutions, and geographic diversification.
They will balance the gravitational pull of established metros against the compelling economics and scalability of alternative locations. And they will recognise that in infrastructure investment, constraints often create the most durable competitive advantages for those positioned to navigate them successfully.
Mumbai’s continued leadership demonstrates that superior connectivity and market access can justify power complexity and cost premiums - but only to a point.
The emergence of Chennai, Bangalore, Hyderabad, and Delhi NCR as viable alternatives reflects operators’ pragmatic assessment that power constraints increasingly outweigh locational advantages, particularly for workloads tolerant of moderate latency.
For the real estate and infrastructure leaders who comprise the GRI Institute’s global community - professionals managing USD 20 trillion in assets across diverse markets - India’s data centre evolution offers valuable lessons applicable beyond a single sector or geography.
The interplay of infrastructure constraints, regulatory policy, sustainability imperatives, and technological change visible in India’s data centre market previews dynamics that will shape built environment investment globally over the coming decade.
The operators and investors who thrive in India’s next phase of data centre growth will be those who view power not as a commodity input but as a strategic asset requiring sophisticated sourcing, integrated renewable solutions, and geographic diversification.
They will balance the gravitational pull of established metros against the compelling economics and scalability of alternative locations. And they will recognise that in infrastructure investment, constraints often create the most durable competitive advantages for those positioned to navigate them successfully.