Buoyed by India’s push towards digitisation and conducive state and central policies, the data centre market is expanding rapidly. Data centres are energy intensive therefore necessitate an uninterrupted supply of power to prevent loss of data and achieve seamless and efficient operations. Digitisation is set to play a pivotal role in charting the course for green energy projects in India.
Data centres in India are developed on colocation or self-build models, also known as captive data centres. Several factors such as cost of energy, capital requirements, gestation period, scalability options, availability and cost of real estate must be carefully examined before choosing either of the two available options.
The adoption of green energy in data centre operations is currently voluntary. This may change, however, with the growing nexus between data centres and the power sector, a case in point being the recent announcement of state-owned power transmission major Power Grid Corporation of India Limited’s foray into data centre business that has also received the nod of the Central Electricity Regulatory Commission (CERC). Several key private energy utilities are also mulling setting up data centre businesses. With an eye on the future, data centre developers are investing in wind and solar projects to meet their growing energy demands.
Energy security is at the heart of any data centre’s operations. Data centres employ various measures to mitigate the effects of power fluctuations and outages. The variable nature of wind and solar energy coupled with the unavailability of large-scale on-site storage systems continues to hinder digital India’s attempts to reduce its dependence on conventional power sources. In response, the energy industry is in the process of augmenting its green energy supply, thereby paving the way for round the clock power that meets the power curve and load pattern related technical requirements of its digital consumers.
India has witnessed rapid expansion of its renewable energy capacity and installations during the past few years. The government is committed to increasing capacity to 500GW by 2030, tying into the vision of achieving net-zero carbon emissions by 2070. Many of the new installations and added capacity will come from private sector participation. The development of new age green energy projects will reinforce the expansion of green data centres.
A data centre can opt to meet its energy requirements through a dedicated energy project (captive power project) or a distribution utility. A data centre powered by a captive power project, is required to hold at least 26% of the equity ownership in that project. Certain transmission related charges do not apply to captive power projects. The location and availability of transmission network(s) in the vicinity of the data centre would determine the nature of transmission and load-related infrastructure required to be created to facilitate the draw of energy.
A data centre may have to execute a power purchase agreement and connectivity agreement to secure its energy needs and protect its interests. Before entering into such agreements, the data centre would be required to procure approvals from the relevant transmission and distribution utilities. Data centres tend to consider factors such as restrictions on the transfer of transmission approval, energy security, stamp duty and registration charges before undertaking any development-related activity.
Information technology infrastructure, especially data centres working in tandem with the Indian green energy industry, will play a vital role in tying the country’s vision of a digital India to a green India. There has to be urgency in adopting a transformative approach towards data centre designs, particularly in addressing energy conservation and promoting the use of green energy. The development of data centres should aid the growth of green energy projects, fuelling in return the expansion of data centre ecosystems. Once implemented, the central government’s data centre policy will pave the way for the development of sustainable and trusted data centre capacity, with an increased reliance on renewable energy. State policies emphasising the need for sustainability in the operations of data centres through the promotion of green technologies will further encourage the use of renewable energy in meeting the nation’s collective sustainable energy goals.
Purusharth Singh is a partner and Akshay Arvind Nair is an associate at Kochhar & Co.
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