India crossed 250 GW of renewable energy capacity in 2025. That is a remarkable achievement. But here is the uncomfortable truth — just as India accelerates its clean energy transition, a new and rapidly growing threat to energy security is emerging from an unexpected source: Artificial Intelligence.
Where India Stands Today
India is the world’s third-largest electricity producer, generating around 1,824 billion units in FY 2024–25.[2] With over 99% of households electrified by 2021, the country has achieved near-universal electricity access — a significant milestone.[1]
But access alone is not energy security. Challenges around affordability, reliability, power quality, and import dependence remain. Voltage fluctuations continue to damage appliances and disrupt businesses. And demand is rising faster than ever.
Who is consuming India’s electricity?[2]
- Industrial sector: ~41–42%
- Domestic: ~24%
- Agriculture: ~17%
- Commercial: ~8%
Rising incomes, urbanisation, and increasing appliance ownership — especially air conditioners — are pushing residential demand sharply upward. Frequent heatwaves are accelerating this further.
The Renewable Energy Surge
India’s renewable energy journey over the last decade has been transformational:[3]
- Total RE capacity crossed 250 GW in 2025, up from under 80 GW a decade ago
- Solar capacity alone grew from 3 GW to over 129 GW — a fortyfold increase
- Total installed power generation capacity exceeded 500 GW in 2025
- Target: 500 GW of non-fossil fuel capacity by 2030
This growth has been driven by strong policy support — the National Solar Mission, Production Linked Incentive (PLI) scheme for solar modules, Green Open Access Rules, wind-solar hybrid projects, and India’s leadership of the International Solar Alliance launched at COP21.
The Reserve Bank of India’s inclusion of renewable energy under priority sector lending has further improved access to finance for RE projects — a critical enabler often overlooked in the policy conversation.
The New Threat: AI and Data Centres
Just as India’s clean energy story gains momentum, a new and energy-hungry force is reshaping the demand landscape — Artificial Intelligence.
The numbers are striking:
- Global data centre electricity consumption: ~415 TWh in 2024 — nearly 1.5% of global electricity demand[4]
- Projected to double to 945 TWh by 2030, representing ~3% of global demand[4]
- India’s data centre electricity consumption is projected to surge fivefold — from 13 TWh in 2024 to 57 TWh by 2030 — growing at ~28% annually[5]
- India is set to become the second-largest Asia-Pacific market for data centre power demand by 2030[5]
Unlike electric vehicles, which are geographically dispersed, data centres are concentrated in specific locations — making grid integration far more challenging. The sudden surge in AI-driven demand is already pressuring local grids and pushing up electricity prices in data centre clusters. Utilities invest in costly infrastructure — and those costs are ultimately passed on to consumers.
The irony is stark: the digital tools we use to model climate solutions are themselves accelerating energy demand.
The Policy Response
Regulators around the world have recognised the same problem and are responding — though not in the same way. Broadly, four approaches have emerged, and they are worth understanding because they signal where energy regulation is heading everywhere else.
- European Union — Disclosure first. The revised Energy Efficiency Directive requires data centres with at least 500 kW of installed IT power to report energy performance annually to a common EU database, covering power and water usage effectiveness, energy reuse and the share of renewable energy.
- Ireland — clean sourcing tied to grid access. Ireland had actually stopped approving new data centre connections around Dublin back in 2021, worried its grid could not take any more load. In December 2025, the regulator lifted that freeze but attached a condition: new data centres must now get at least 80% of their yearly electricity from new renewable projects built in Ireland, with six years to reach that target and yearly progress reports along the way.
- Spain — A draft decree fast-tracked in August 2026 would set the same 80% renewable target as Ireland for new data centres above 1 MW — but checked hour by hour rather than averaged over the year. In practice, that means the renewable electricity has to be available at the same hour it is used, instead of a data centre using grid power on a still, cloudy day and making up for it with surplus solar or wind later.
- India (Andhra Pradesh) — Several Indian states now set a minimum renewable energy share for data centres. Andhra Pradesh requires at least 51% renewable power for large data centres (300 MW and above) that get their own power distribution licence.[6] Tamil Nadu requires 30% renewable energy for projects above ₹500 crore to get its incentives.[10] Karnataka requires 30% renewable energy to get industrial (instead of commercial) power tariffs, and gives extra rebates above 50%.[11] Maharashtra requires 51% renewable energy for its Green Integrated Data Centre Parks.[12][14] Gujarat also requires 51% renewable energy, under its new policy targeting 7.5 GW of data centre capacity by 2029.[13][15]
The methods are all different — disclosure in the EU, clean-energy conditions on grid access in Ireland and Spain, and licensing with a renewable floor in Andhra Pradesh. But they are all pointing the same way. Large power users are increasingly expected to bring their own clean energy instead of simply drawing on a shared grid built for everyone else, and the cost of building new infrastructure for them is being shifted away from ordinary households and onto the users creating the extra demand. Energy sourcing itself is shifting from a procurement decision to a condition of doing business — something that now determines whether a project gets connected to the grid at all.
Decarbonisation in the Middle of All This
India committed to net-zero greenhouse gas emissions by 2070 at COP26 in Glasgow. The path there runs directly through renewable energy — reducing emissions intensity, improving air quality, and decoupling growth from fossil fuels.
Distributed renewable energy solutions — rooftop solar, solar pumps, biogas plants, energy from agricultural waste — are particularly important for rural households, small farmers, and marginalised communities. These decentralised systems reduce dependence on centralised fossil-fuel grids while improving energy access where it matters most.
What Needs to Happen
India’s energy transition will not happen on ambition alone. It requires:
- Large-scale international climate finance to support coal phase-down and RE scale-up
- Grid modernisation to handle renewable intermittency and new demand from AI and EVs
- Corporate action — improving energy efficiency, reducing wastage, adopting cleaner technologies, and investing in renewable energy
- Policy coordination across energy, technology, and climate — because these are no longer separate conversations
The Bottom Line
India’s renewable energy growth story is real and impressive. But energy security in 2025 is not just about how much clean power you can generate — it is about whether your grid, your policy framework, and your corporate ecosystem can keep pace with demand that is growing faster, and from more directions, than ever before.
The question for every business and policymaker in India today is: are we building an energy future that is not just clean, but genuinely secure?
Sources
[1] India Climate & Energy Dashboard, NITI Aayog. Available at: https://iced.niti.gov.in/
[2] Energy Statistics India 2025, Ministry of Statistics and Programme Implementation (MoSPI). Available at: https://www.mospi.gov.in/sites/default/files/publication_reports/Energy_Statistics_2025/Energy%20Statistics%20India%202025_27032025.pdf
[3] Power Sector at a Glance – All India, Ministry of Power. Available at: https://powermin.gov.in/en/content/power-sector-glance-all-india
[4] Global Data Centre Electricity Consumption by Equipment, Base Case 2020–2030, International Energy Agency (IEA). Available at: https://www.iea.org/data-and-statistics/charts/global-data-centre-electricity-consumption-by-equipment-base-case-2020-2030
[5] Energy Demand from AI, Energy and AI, International Energy Agency (IEA). Available at: https://www.iea.org/reports/energy-and-ai/energy-demand-from-ai
[6] AP unveils deemed discom policy for large data centres, The Times of India. Available at: https://timesofindia.indiatimes.com/city/vijayawada/ap-unveils-deemed-discom-policy-for-large-data-centres/articleshow/130586151.cms
[7] Energy Efficiency Directive – data centre energy performance reporting, Swedish Energy Agency (Energimyndigheten). Available at: https://www.energimyndigheten.se/en/sustainability/data-centre-energy-performance-reporting
[8] Large Energy Users Connection Policy Decision Paper (CRU/2025236), Commission for Regulation of Utilities, Ireland. Available at: https://cruie-live-96ca64acab2247eca8a850a7e54b-5b34f62.divio-media.com/documents/CRU2025236_Large_Energy_User_connection_policy_decision_paper.pdf
[9] Data Center Sustainability Regulation: A 2026 Global Map, ASUENE. Available at: https://asuene.com/us/blog/data-center-sustainability-regulation-a-2026-global-map
[10] India’s Tamil Nadu government releases data center policy, Data Center Dynamics. Available at: https://www.datacenterdynamics.com/en/news/indias-tamil-nadu-government-releases-data-center-policy/
[11] Only green energy will sustain data centres, Law.asia. Available at: https://law.asia/india-data-centre-infrastructures/
[12] Maharashtra Allows Data Centres to Generate Green Power, Construction World. Available at: https://www.constructionworld.in/energy-infrastructure/power-and-renewable-energy/maharashtra-allows-data-centres-to-generate-green-power/79992
[13] Gujarat Becomes First State To Make Renewable Power Mandatory for AI Data Centers, Saur Energy. Available at: https://www.saurenergy.com/solar-energy-news/gujarat-becomes-first-state-to-make-renewable-power-mandatory-for-ai-data-centers-12246135
[14] Maharashtra expands green data center park policy statewide (Government Resolution dated 9 June 2026), Power Peak Digest. Available at: https://powerpeakdigest.com/maharashtra-green-data-center-policy-expansion/
[15] Gujarat notifies Data Center Policy 2026-29, targets 7.5 GW Green AI capacity, ANI. Available at: https://aninews.in/news/national/general-news/gujarat-notifies-data-center-policy-2026-29-targets-75-gw-green-ai-capacity20260807230226/
The article is written by Mr. Shasikhanth Golla.