BS Manthan 2026: How AI is forcing a green rethink for data centres

As AI drives power-hungry data centres, experts urge India to embed renewable and green norms into its data centre policy to ensure sustainable digital growth

India will need to factor a green energy component into its data centre policy framework as the country’s expanding digital footprint — driven by the rapid rise of artificial intelligence (AI) systems — creates demand for greater storage capacity, experts said. 

The views were shared at a panel discussion titled Data Centre: A Sustainability Challenge during the ongoing two-day Business Standard Manthan summit. The session was moderated by Avik Das of Business Standard and featured Mohit Bhargava, country director at the India Energy & Climate Center, Goldman School of Public Policy, UC Berkeley; Nikhil Dhingra, chief executive officer (CEO) of Acme Solar Holdings; and Sunil Gupta, cofounder, managing director, and CEO of Yotta Data Services. 

 

The panellists said a comprehensive green data centre policy was needed to drive sustainability and efficiency in India’s storage market. 

“In the National Data Centre Policy, we need to add the word ‘green’. India is a place that can actually house green data centres at the highest possible level. A National Green Data Centre Policy could be an important step and a strong signal,” Bhargava said, adding that India can produce green energy at a more competitive cost than many other countries. 

Dhingra echoed Bhargava’s views on India’s competitiveness in generating and supplying renewable power, observing that much of the power produced is cheaper than what state electricity boards are able to offer. “India is very competitive on power, 

and renewables stand ahead of other sources in terms of supply and cost. Most data centres have already tied up with renewable power operators, so renewable energy is more than geared up to supply additional demand round the clock,” Dhingra said. 

Gupta also agreed, saying government policies already incentivise efficiency and sustainability. “Whether it’s central or state government policy, many incentives are linked to power usage efficiency and green quotients. While we don’t need financial incentives, the government is saying that if incentives are given, they will be tied to how efficient and green you are. I think that’s the right approach,” he said. 

Underscoring the need for green infrastructure, Gupta said that as India’s digital ecosystem expands, underlying systems must be strengthened through energy-efficient solutions. “Data centres have rows and rows of racks. Earlier, a typical rack consumed 6-7 kilowatts, and that was the power density for nearly 25 years. With AI, when you are training models like ChatGPT or Gemini, the hardware is powered by graphics processing units that consume at least 10 times more power,” he said. 

Bhargava, Dhingra, and Gupta said the sharp rise in power density is also increasing pressure on cooling requirements, water usage, and grid stability. 

As AI data centres expand, newer infrastructure will require additional investment in cooling technologies, battery storage, and smart grid integration to avoid bottlenecks and limit environmental impact while meeting round-the-clock demand, they said. 

Beyond solar and wind, nuclear power could also serve as an alternative to non-renewable energy sources for data centres, Dhingra said, adding that Acme Solar plans to expand in that area. “It’s a promising space. The government has prioritised several sectors and encouraged private participation. As seen in developed markets like the US, nuclear needs to play a large role. Allowing private players across the value chain is a positive step,” he said. 

Gupta said the main constraint is not energy generation or storage but last-mile delivery to data centre locations. Most new data centres, he said, are being developed on the outskirts of large cities or in smaller towns, where ensuring stable and adequate power can be challenging. In such cases, nuclear energy could offer an effective solution. 

Gupta also said the government should focus on easing compliance norms. “As an industry, we are not asking for fiscal incentives. What we want is ease of doing business. We often need 40–50 approvals before a tender even goes live, and that’s what we want to avoid. Generating more demand is equally important,” he added.