India’s AI Data Centre Boom Set to Add 26.3 GW Load, Raising Grid Stability Concerns

India’s power grid is expected to see an additional 26.3 GW of electricity demand from AI driven data centres by 2031-32, nearly double the Centre’s earlier estimate of 13.56 GW, according to the Ministry of Power.

The ministry informed Parliament that the additional demand is expected to be integrated into the national grid and will primarily be met through renewable energy capacity. The latest projection is based on data centre projects received by various states, while consultations are underway with state transmission utilities, distribution companies and data centre developers.

The discussions focus on ensuring reliable power supply, strengthening transmission infrastructure and managing grid balancing requirements. However, officials have raised concerns that highly variable data centre demand, marked by sharp ramps and sudden changes in load, could pose challenges to grid stability.

Policy discussions are also reportedly considering the possibility of locating data centres away from major urban centres to reduce transmission congestion. Most data centres are currently concentrated around IT hubs, and a rapid expansion of capacity in these locations could put additional pressure on transmission networks.

There is also a view that data centres could be developed closer to renewable energy sources. Such an approach could help reduce transmission congestion while allowing their growing electricity demand to be supplied through cleaner energy sources.

India’s data centre sector has expanded rapidly in recent years, with capacity increasing from around 375 MW in 2020 to approximately 1.5 GW in 2025. According to Wood Mackenzie, India’s operational data centre capacity is expected to reach 12 GW by 2030, representing a compound annual growth rate of around 40 percent.

AI specific data centre capacity is projected to grow nearly 24 fold during the same period, increasing from 275 MW to 6,546 MW, driven by rising demand from hyperscale cloud providers, enterprise digitalisation and artificial intelligence applications.

The growth in data centre infrastructure is also being supported by India’s expanding digital economy. fData centre electricity demand is forecast to increase 20 fold from 10 TWh in 2025 by 2040, accounting for around 7 percent of total electricity demand.

The rapid rise of AI and data centre infrastructure has also raised concerns about its impact on power system operations. At the India AI Impact Summit in February, Grid Controller of India Chairman and Managing Director Samir Chandra Saxena had warned that the variable and highly spiky nature of data centre loads, along with sharp ramps, could pose risks to grid stability.