Challenges for India’s Electricity Grid from Data Centre Expansion

Syllabus: GS3/ Science and Technology

Context

• India’s power system is headed towards a “paradigm shift” as artificial intelligence (AI)-driven data centres are emerging as large, complex, and electricity-intensive infrastructure.

Rising Power Demand from Data Centres

• India has an installed data centre capacity of 1.2 GW, which will grow to about 10 GW by 2030, with investments of over $200 billion.
• Power Demand by Data Centres: AI workloads use large numbers of Graphic Processing Units (GPUs) with individual racks consuming 80-150 KW compared to 15-20 KW for traditional enterprise servers.
  • This computational intensity drives an insatiable demand for electricity, making AI the most significant driver of increased energy consumption within the data centre sector.
• Continuous yet Highly Variable Demand: Data centres operate round the clock with a stable base load due to uninterrupted computing and cooling needs.
  • However AI-driven workloads can cause sudden spikes in electricity consumption during peak processing periods, leading to rapid load fluctuations that challenge grid balancing and frequency stability.

Implications for Grid Infrastructure

• Pressure on Transmission Systems: Existing sub-transmission infrastructure may not be capable of meeting the massive power requirements of hyperscale facilities.
  • Therefore, new high-capacity transmission corridors, ultra-high-voltage substations, and dedicated connectivity will be required.
• Resource Adequacy Challenges: Meeting data centre demand involves more than installing additional generation capacity. The system must also maintain adequate reserves, balancing power, and ancillary services to ensure reliability during sudden fluctuations.
• Difficulty in Demand Forecasting: AI-driven computing demand is inherently unpredictable. This makes load forecasting and scheduling significantly more complex for system operators, thereby increasing the risk of supply-demand mismatches.

Measures to Address Data Centre Power Demand

• Demand-Side Measures:
  • Energy-efficient computing infrastructure: Adoption of advanced chips, efficient cooling systems, and optimized hardware reduces electricity consumption per unit of computation.
  • Heterogeneous computing: Using a mix of CPUs, GPUs, and specialized accelerators ensures that energy-intensive processors are used only when necessary.
  • On-site energy storage: Battery systems can supply short-term power during spikes, reducing sudden draw from the grid.
• Supply-Side Measures:
  • Expansion of reliable baseload generation: Stable sources such as coal, hydro, gas, and nuclear power are required to ensure uninterrupted electricity supply.
  • Hybrid energy systems: Combining grid supply with captive generation and renewable installations enhances reliability and reduces dependence on a single source.
  • Development of high-voltage substations and transmission corridors is essential to deliver large quantities of power.

Way Ahead

• AI-driven data centres represent both a major opportunity for economic growth and a significant challenge for India’s power system.
• India must adopt a forward-looking strategy to integrate digital infrastructure expansion with energy planning.
• This strategy should include a dedicated policy framework for data centre power supply, updated grid codes for large dynamic loads, and accelerated development of low-carbon power sources such as nuclear and hydro energy.

Source: IE