Powering the Digital Future: Why India’s Data Centres Must Choose Renewables Over Gas
India’s fast-growing data centre sector faces a crucial energy choice. Discover why renewables and battery storage are beating natural gas in 2025.
- 262 data centres put India in the global top 10
- $6.5 billion invested in the past decade
- 1.4GW in 2024 capacity will surge to 9GW by 2030
- 3% of India’s electricity could go to data centres by 2030
India’s digital revolution is powering ahead—and its data centres are at the center of this electrifying story. These massive server farms drive the nation’s AI ambitions and support everything from banking apps to high-voltage streaming. But behind the cloud’s silver lining lurks an urgent question: What will power this energy-hungry infrastructure in 2025 and beyond?
Are Data Centres Driving India’s Energy Surge?
Absolutely. India’s energy demand is climbing at a jaw-dropping 7% per year, fueled by e-commerce, smartphones, electric vehicles, and especially—data centres. With 262 operational sites, India now ranks seventh worldwide, just behind tech powerhouses like France and Canada.
The government has supercharged this sector with infrastructure status and investment incentives, sparking over $6.5 billion in project funding. Last year alone, these server clusters generated $1.2 billion in revenue and provided thousands of high-skilled jobs.
But there’s a catch: Data centres now draw as much power as an entire aluminium smelter or a city of 100,000 homes—putting incredible strain on local power grids.
How Does India’s Power Mix Stack Up—Gas or Renewables?
On the surface, natural gas appears cleaner than coal. However, recent energy crises and spiraling global gas prices have undermined its appeal. India produces only half the gas it needs—meaning the rest is imported at unpredictable rates.
This heavy reliance on imports exposes the country’s data centres to price spikes and supply chain risks amid international uncertainty, trade wars, and conflicts. Natural gas prices recently rose 3.7%, while the proportion of lower-priced domestic gas fell from 85% to just 64% in three years, according to the International Energy Agency.
Meanwhile, the cost of renewable energy across India keeps falling. Today, firm renewable tariffs (with storage) hover around ₹4.98 per unit—cheaper than the average for natural gas. Wind, solar, and battery systems are not only greener; they increasingly make the most financial sense.
Why Betting on Gas is a Risky Move
Switching data centres to natural gas isn’t just expensive—it’s out of step for a sector rooted in innovation. Relying on gas exposes businesses to global volatility and long-term price hikes, while infrastructure for gas remains underbuilt and costly.
As the government pushes to install 500GW of renewables by 2030, data centre clusters in Mumbai, Hyderabad, Delhi NCR, Bangalore, and Chennai are perfectly positioned to harness solar, wind, and local microgrids. India’s flagship Yotta NM1 data centre near Mumbai already gets 50% of its power from renewable sources, aiming for 70%.
How Can Battery Storage Future-Proof Data Centres?
India’s energy storage sector is booming, thanks to bold Viability Gap Funding (VGF) schemes covering up to 30% of costs for standalone battery projects. Standalone battery storage system (BESS) tenders soared to 6.1GW in early 2025, surpassing all of last year’s utility-scale capacity.
These batteries can store solar and wind power for when it’s needed most, providing energy security and grid stability. As renewables get cheaper and storage innovations expand, they promise reliable, round-the-clock electricity—at a fraction of the price volatility seen in global gas markets.
Q&A: Your Top Questions Answered
Q: Can India realistically power all its data centres with renewables?
India is already doing it—many leading data centres rely heavily on renewables and battery storage. Incentives and plummeting costs are making this transition even faster.
Q: Won’t switching to renewables make power less reliable?
Modern battery systems and sophisticated grid management can ensure uninterrupted supply. With storage, renewables become as dependable as traditional sources.
Q: Isn’t natural gas still a necessary backup?
Not anymore. The combination of cost, uncertainty, and environmental impact makes renewables with storage the smarter, future-proof solution.
How to Make the Switch: Steps for Data Centre Operators
1. Assess Your Energy Mix: Audit your consumption and carbon footprint.
2. Partner With Renewable Providers: Tap into India’s flourishing solar and wind market.
3. Invest in Battery Storage: Use government schemes and incentives to offset costs.
4. Monitor Policy Updates: Track evolving incentives and tenders from the Ministry of New and Renewable Energy.
5. Lead Industry Collaboration: Join alliances advancing clean tech and grid resilience.
India’s digital ambitions demand a new energy roadmap. Don’t let your data centre get stuck in the past—go green and be part of the solution!
Checklist for Data Centre Leaders:
– [_] Audit energy consumption and emissions
– [_] Request quotes from renewable suppliers
– [_] Explore government incentive programs (like VGF)
– [_] Invest in advanced battery storage
– [_] Collaborate with industry leaders on sustainability
Ready to future-proof your digital operations? Get started today and help power India’s clean energy revolution! For more energy news, visit Bloomberg or see the latest research at IEEFA.
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