India's Data Centres Are Going Off Grid

Why Data Centres Are Charting An Off-Grid Path To Power Themselves

By Katya Naidu

What? 

India is having its moment in the cloud as the country gears up to add 3.3 gigawatts of data centre capacity. Looks like these new-age, AI-powered large electricity consumers are choosing to move away from state discoms, as Andhra Pradesh recently allowed data centre players to obtain private power discom licences. 

Until now, private power discom licences were given to private entities like Tata Power, Adani Electricity Mumbai and Torrent Power, which supply electricity to an area and its consumers. The latest move allows large hyperscale data centers who are also commercial & industrial consumers to become power distributors as well. 

India’s race to build the digital infrastructure in the era of AI is creating the unexpected challenge of finding enough reliable electricity to keep vast new data centres running around the clock. 

Why? 

Increasingly, some of the country’s largest cloud and AI operators might be concluding that state utilities cannot meet those demands quickly or flexibly enough, and are seeking to generate, procure and power on their own terms. 

Armed with a power discom licence, they could also look to sub-distribute excess power to other consumers. 

Electricity is the central resource around which they are built. So much so, data centres are measured in megawatts. 

As per a JM Financial report, the power requirement per rack can be anywhere between five and 50 kilowatt (kW). Their power needs are also much more complicated than those of other large commercial consumers. 

“Hyperscale data centres typically require over 100 MW of continuous power along with very high uptime standards, making private discoms and specialised power arrangements attractive for faster infrastructure augmentation, dedicated feeder infrastructure, tariff visibility, and flexible renewable sourcing,” Ram Soni, practice leader of mobility energy and transportation at Praxis Global Alliance, told The Core.  

Downtimes can be catastrophic to a data centre, and hence require reliable high-tension power connections that cannot be off even for a minute.

Why It Matters 

In addition to reliability, data centres, especially hyperscale AI data centres, require rapidly scalable power infrastructure. With a discom licence, a data centre can write its own rulebook, beyond the regulatory structure of a state-owned discom.

Alternative procurement structures, such as open access, become increasingly attractive to such players as they bring assurance of power supply. As they purchase power directly from the producers, data centres can write their own rulebook. 

“So most data centres might end up paying for power they might not completely use. In such cases, they could sub-distribute excess power that has been contracted to and not used to other consumers,” surmises Lenka. 

On the other hand, one more complication might arise for hyperscalers who might become legit power distributors. 

They would be bound by the renewable purchase obligations (RPOs) that all distributors have to abide by as per the mandate. As per the Ministry of Power, the current mandates, around 33% of the total power procured by the entity must be as much as 33% of as FY26. 

Most power experts believe that it’s not difficult for a data centre distribution licensor to meet renewable targets, unlike state discoms, which are bogged down by legacy losses.

Private Credit Belongs in the Fixed-Income Sleeve. Against Those Benchmarks, the Numbers Aren't Close.

For the trailing twelve months ending March 31, 2026:† ·

• Percent ABS: 14.6% net returns after losses

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Private credit isn't an equity substitute. It belongs in the fixed-income sleeve — and against bond benchmarks, the performance gap is hard to dismiss. A collateralized loan with a fixed coupon and a defined repayment schedule fills the same portfolio role as a bond, with different terms and a different risk profile.

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• 17.0% current weighted average coupon rate

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Review the performance numbers on Percent.

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5.23 million barrels per day

That's how much crude India processed in April, down 8.9% from March and 2.2% from a year earlier, according to provisional government data. As the West Asia conflict drags on, it has weighed on the world's third-largest oil importer and consumer, according to provisional government data.

Overview: The US-Iran conflict has roiled energy markets and disrupted shipping through the Strait of Hormuz, a chokepoint handling around 20% of global oil and LNG supplies, forcing Indian refiners to seek alternative crude from Latin America and Africa.

Nayara Energy, part-owned by Russia's Rosneft, received just one Russian oil cargo in April after shutting its refinery for most of the month for routine maintenance, Reuters reported.

Setting: The energy stress is increasingly reaching consumers, as state fuel retailers, which control 90% of the market, raised diesel by Rs 2.71 per litre and petrol by Rs 2.61 on Monday, the fourth hike in May. CNG prices in Delhi also rose by Rs 2 per kg on Tuesday, the third increase in under two weeks, pushing rates to Rs 83.09 per kg.

Two-Tier Internet?

Telecom major Bharti Airtel defended its new Priority Postpaid service before a Department of Telecommunications (DoT) panel, saying the offering does not violate India’s net neutrality rules or reduce network quality for prepaid users.

Net neutrality is the principle that telecom operators should treat all internet traffic equally, without giving faster access to certain users, apps or websites. Airtel said its service, launched on May 19, uses 5G network slicing technology in a “content-neutral” way and does not involve blocking, slowing down or prioritising specific apps or websites.

How We Got Here: Concerns emerged after Airtel introduced a premium service promising more stable connectivity for postpaid users during network congestion. Critics argue this could create a two-tier internet experience where higher-paying users get better service than prepaid customers. Airtel argued that banning or limiting such features now could slow India’s telecom innovation in the long run.

The Turning Point: Under the plan, Airtel creates a dedicated virtual “slice” of its 5G network for postpaid customers. The service is now under government scrutiny, with regulators examining whether it complies with Telecom Regulatory Authority of India (TRAI) net neutrality guidelines.

Air India Probe Runs Long

Indian investigators probing last June's Air India Boeing 787 crash, the deadliest aviation disaster in a decade, killing 260 people, will release an interim report ahead of the anniversary rather than a final one, Reuters reported. The final report is not ready because "it is a very complex investigation and is taking time."

The Lead: The interim report will be more comprehensive than last July's preliminary findings, which showed the Dreamliner's engine fuel switches flipped almost simultaneously after takeoff from Ahmedabad, starving both engines of fuel. A cockpit recording suggested the captain cut fuel flow, though investigators have not reached formal conclusions.

Pivot: The delay also carries a procedural consequence. Unlike a final report, an interim statement does not trigger the mandatory consultation process under which the US National Transportation Safety Board would receive a draft copy in advance to formally comment.

That distinction has drawn scrutiny, given a separate inquiry already underway into fuel switches that may have been faulty on another Air India Dreamliner flight in February.

India Capital Crunch

India faces a growing capital problem as foreign investment inflows weaken while the country continues to run large trade deficits and a widening current account deficit, according to a note by Kotak Institutional Equities. The brokerage said net foreign direct investment inflows fell sharply from an annual average of about US$37 billion during FY2019-23 to just US$1 billion in FY2025.

The warning comes amid rising crude oil prices and global uncertainty linked to the Iran-Israel conflict, alongside sustained foreign investor outflows from Indian markets in recent months. Previously on The Core Report, Indian School of Business professor Prasanna Tantri warned that India’s bigger problem right now is “money going out”, adding that higher oil prices and weak capital inflows could further pressure the rupee.

Origin: Kotak attributed the decline to rising outflows from private equity and venture capital investors, multinational companies selling stakes in Indian subsidiaries, and Indian firms increasing overseas investments.

What’s Next? The brokerage also said foreign portfolio investor flows may remain muted because India offers weaker earnings growth relative to other emerging markets and limited exposure to the global artificial intelligence and semiconductor boom.

“We expect FPI flows to stay muted,” Kotak said, citing India’s “low attractiveness versus other emerging markets.” The note added that high crude oil prices could further pressure India’s balance of payments in FY2027.

India On Ebola Alert

India's aviation regulator has stepped up screening measures as the Ebola outbreak in Central Africa triggers a global health response. The Directorate General of Civil Aviation (DGCA) has directed airlines to ensure passengers travelling from or transiting through Uganda and the Democratic Republic of Congo mandatorily fill out self-declaration forms before deboarding, and has made health announcements during flights compulsory to help identify possible cases early.

Context: The move follows the WHO's classification of the current Ebola outbreak as a public health emergency of international concern, with countries bordering the two nations, including South Sudan, assessed as being at high risk of transmission.

Next Steps: All passengers and crew, irrespective of nationality, must submit self-declaration forms at designated immigration or health counters on arrival in India. Airlines operating in affected regions have also been asked to designate a single cabin crew member to exclusively care for any symptomatic passenger, and to disinfect the aircraft after landing.

India Falls Behind Taiwan in Market Capitalisation

On Episode 885 of The Core Report, financial journalist Govindraj Ethiraj talks to Vishwas Chitale, fellow at the Council on Energy, Environment and Water (CEEW) as well as Amol Bansal, Founder and CEO at BK Saraf Jewellers.

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