Karnataka may offer sops for innovative data centre cooling solutions

Karnataka's upcoming data centre policy may incentivise firms developing innovative cooling, renewable energy and cable landing station solutions

In a first-of-its-kind move, the Karnataka government is likely to offer incentives to companies and startups that develop innovative cooling solutions for data centres. The move is aimed at attracting global companies working in these areas, sources told Business Standard.

 

“Likewise, renewable energy is also something we are looking at. If a data centre can ensure that there is no dependence on energy grids that are powered by traditional fuel such as coal, we can incentivise that as well,” a senior state government official said.

 

Cooling data centres traditionally requires massive amounts of water, which is then used as a coolant to dissipate the heat generated by the several thousand rows of data centre racks in the building. Though there have been innovations that use less water, most have not been implemented at scale because of the high cost of these solutions.

 

According to the International Energy Agency (IEA), an average 100 MW (megawatt) data centre consumes about 2 million litres of water per day, equivalent to the water consumption of approximately 6,500 households.

 

“The water consumption by data centres has to be brought down. So, the idea of providing incentives is to ensure that whatever new innovations have been developed in the space get the right support,” one of the officials said.

 

Apart from this, the new data centre policy, likely to be launched within the next two to three months, includes incentives for companies that develop solutions to pack more servers per rack, the official said. The state government would also weave in elements from the Beyond Bengaluru scheme, under which companies receive additional financial and non-financial incentives to set up data centres in tier-II and tier-III cities and towns, another state government official said.

 

“In areas where we see the potential of linking the new data centre with potential sub-sea cable landing stations, incentives are being planned. Under the data centre policy, we are also thinking of working with global companies, telecom companies and technology giants to incentivise cable landing stations as well,” the official quoted above said.

 

Though the corpus for the second phase of the state’s data centre policy has not yet been finalised, the Karnataka government is in talks with industry players to assess requirements and will decide accordingly, one of the officials said.

 

The first phase of the state’s data centre policy, which began in 2022, aimed to develop 200 MW of data centre capacity in Karnataka by 2025. The policy also allows data centres to draw power from two different substations to ensure a reliable, uninterrupted power supply.

 

The policy provides for a one-time 7 per cent capital subsidy of up to ₹10 crore on the value of fixed assets, excluding land and buildings, and a 10 per cent subsidy on land purchase if the land parcel is outside the Bengaluru urban area.