Data centres capacity expects to double to 1800 MW by FY25

CRISIL Ratings told the media that data centre capacity in India might double to 1,700-1,800 MW by FY25 from 870 MW last fiscal, powered by the troika of a data boom, digital adoption and local data storage mandates with an investment of over Rs 40,000 crore.

The corporate embrace of advanced technologies and digital infrastructure and the increasing use of smart devices led to a massive spurt in data and cloud usage, creating a huge demand for data centres.

Launching 5G services is likely by the end of FY23, which will further boost demand for data and storage capacities.

Director of CRISIL Ratings, Nitesh Jain, said that data centres are emerging in India. The industry expects to add 850-900 MW capacity during FY23-25. Mumbai accounts for around half of the existing capacity and is expected to add 300 MW. Hyderabad, Chennai and Pune are likely to add 400 MW capacity, respectively.

Of Rs 40,000 crore investments, one-third will be to acquire land, one-fifth for substations, and the remaining for civil work, purchase of equipment and fit-outs.

Capital expenditure (capex) will be required for captive renewable energy sources, cheaper than grid energy.

Associate Director of CRISIL Ratings, Rakshit Kachhal, said that the electricity accounts for 45-50% of the operating expense of data centres, focusing on an optimum mix of grid power and renewables.

The share of renewables in data centre power consumption might increase to 35-40% by FY25 from less than 15%. As renewable power is cheaper, it will improve the operating margins of the sector by 200-300 basis points by FY25 and help support the project’s returns on capital employed at 13-15%.

The implementation of the Data Protection Bill and the Data Centre Policy and mass uptake of 5G services can boost demand for data centres in India.

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