AI-led data centre boom lifts power demand in western, southern India

Year-on-year power demand has risen about 3 per cent, led by AI-driven data centres and GCC clusters in southern and western India, signalling higher peak electricity needs in 2026

It is not summer yet, but the artificial intelligence-led surge in demand from data centres for power is starting to show up in a big way in India’s data on power consumption. In fact, there is already a marked year-on-year (Y-o-Y) surge of about 3 per cent, which will certainly lead demand for electricity from here.

 

Slicing data from the Grid Controller of India by regions shows an interesting pattern. The surge is marked in western and southern states where most of the global capability centres (GCCs) are concentrated. If this early pattern continues, peak demand for electricity in India in 2026 could easily surpass the 249.9 GW recorded in FY25.

 

Helping read this pattern is India’s unified national grid for electricity, which makes it possible to access data on daily demand and supply in a highly granular form.

 

As the chart shows, for the one-month period between January 15 and February 15, the additional demand is clearly visible. This is also the period when the cool season still reigns in several parts of India, moderating demand for air conditioners and fans. This year, however, despite a cool January, power demand has already shot up Y-o-Y.

 

The consumption pattern in these two regions, thus, is a steady upward graph, which is markedly different from other regions, where the rise in demand for electricity happens closer to the summer months. Also, the rise in demand is seasonal, like that in the northern region in the hot summer, and slides back fairly soon and has not grown Y-o-Y. For instance, while FY25 witnessed a peak demand of 249.9 GW, that of FY26 was lower at 245.4 GW.

 

How are GCC clusters reshaping regional power demand?

 

In this context, the emerging scenario for the western and southern regions aligns with the rise in demand for electricity for GCCs. It is not surprising that the rise is more pronounced for the southern region at 9 per cent, which includes Hyderabad and Bengaluru, both high-density centres for GCCs.

 

Of the 1,700 GCCs in India as of December 2025, Nasscom estimates that the major clusters are in Bengaluru, Hyderabad, Pune, Chennai, Mumbai, and Delhi-National Capital Region (NCR). The data centre industry is projected to reach $105 billion by 2030, supported by nearly 2,400 centres employing over 2.8 million people.

 

As the Economic Survey 2024-25 points out, these GCCs have moved beyond their traditional back-office roles to become strategic hubs for engineering research and development (R&D), particularly in aerospace, defence, semiconductors, and advanced manufacturing. The report also notes that GCCs are driving growth and innovation in the services sector, supported by India’s skilled workforce, ease of doing business reforms, and liberalised foreign direct investment (FDI) policies. This transformation positions India as a global leader in digital and engineering innovation while strengthening its self-reliance in high-tech industries. Another government document notes that in just five years, their combined revenue has jumped from $40.4 billion in FY19 to $64.6 billion in FY24, growing at a healthy pace of 9.8 per cent annually.

 

Can India’s grid absorb the AI-led power surge?

 

On the policy side, it is important that the rise in demand for GCCs be matched by a commensurate rise in the supply of power. The Grid Controller data bears out this confidence. For the one-month period that Business Standard studied, there has been no mismatch between peak demand and supply of electricity.

 

Also, because of the national grid, India does not have to plan for localised shortages, unlike, say, the United States, where rising demand from AI facilities has led to power shortages and an increase in the cost of electricity.

 

India is in a far healthier situation. The installed electricity generation capacity of the country is over 500 GW. The maximum draw on this was 249.9 GW in FY25, as seen above. So, because of the slack in the system, India can afford to budget for a far larger draw on its installed capacity. Also, the demand is unlikely to be concentrated in the evening hours, which instead characterise the peaks of domestic consumption. With that kind of surplus power, the AI surge in power consumption, already visible in the southern and western regions, need not be a major concern for the government, at least for now.