AI may account for 20% of incremental power demand by 2030: Report

India's power demand surge to 2030 will be driven increasingly by AI and data centres, with tech majors fuelling a sharp rise in electricity consumption and capex

The incremental increase in demand for electricity in India between 2025 and 2030 is estimated to hit 817 twh (trillion-watt hours), of which around one-fifth will be accounted for by artificial intelligence-related workload, which includes data centres, according to a report by Indian Capital Management, part of America-based investment management company India Capital Management LLC.

 

The report points out the share of artificial intelligence-related power demand will become even larger after 2030, when the country will see greater increase in data capacity.

 

The earlier forecast in 2023 had projected incremental electricity demand in 2030 at 661 twh.  

 

As a result, the overall incremental increase in electricity demand in India between 2025 and 2030 will be 32 per cent higher than that of the United States (US) and p times that of the European Union, despite strong demand growth in these counties too.

 

One key element in this emanates from India’s data centres, which will see an expansion, especially with announcements from Google, Microsoft, and Amazon in the past few weeks.

 

The increase in data capacity, the report says, will go up much faster than in the US, and will be up fivefold between 2025 and 2030 — from 1,668 Mw to 8,120 Mw. In contrast, in the same period the US will see a threefold increase in data capacity.

 

The reason is manifold. One is the rapid increase in internet, mobile and digital transactions, with India now accounting for one-fifth of data consumption and has become the largest ChaptGPT user base outside the US, with an 8 per cent global market share of consumers.

 

Two, India is seeing a rapid rise in enterprise digitisation and cloud adoption and the policy push of the government has helped in encouraging data localisation and domestic storage.

 

Also there has been an expansion in hyperscalers and edge data centres to reduce latency, which has pushed demand for more capacity.

 

And last, India is emerging as a global hub for data processing and storage, given the cost advantage as well as a lot of renewable capacity coming up.

 

This is reflected in the fact that tech majors have announced huge investments in building data capacity.

 

Google has announced an investment of $15 billion to set up a data centre hub in India. It will be its largest outside the US.

 

Amazon announced investing $35 billion, including artificial intelligence-driven digitisation.

 

Microsoft also joined the party, promising to invest $17.5 billion.

 

The report estimates there will be a 2.5 times capex increase in the next five years compared to the past five years, with a requirement of $450 billion-500 billion financing opportunity.