Increasing cloud computing investments to boost rising power consumption in India

India’s power consumption is expected to reach 2,137TWh in 2031.

India’s spending on cloud computing is expected to increase in the coming years and is expected to add up into the rising energy consumption in the country, according to Fitch Solutions.

In a report, Fitch said India’s spending is expected to increase to IDR929b in 2026 from IDR364b as of end-2021, at an annual average rate of 27%, citing data from its information and communications technology team.

This is following the Indian government announcement in August 2021 to make the country a global data centre hub, with the government planning to include data centres into the category of infrastructure assets “to reduce barriers to access cheaper and long-term institutional funds from April 2022.”

“As India reduces financial barriers to the construction of data centres and pushes to be a global data centre hub, increasing private sector participation will aid in the robust growth of the cloud computing sector,” it said.

“We believe that the realisation of these plans will contribute to the market’s growing power consumption as well, given the construction of energy-intensive data centres,” Fitch added.

Fitch added that servers and cooling solutions will take up the bulk of electricity consumption in data centres, citing a study commissioned by the US government which identified the two to account for 43% of data centre’s electricity consumption.

“Overall, we forecast India’s power consumption to increase from 1,268 terawatt-hour (TWh) as of end-2021 to 2,137TWh in 2031 at an annual average growth rate of 5.4%,” it said.

Data centres use 10 to 40 times more energy per square foot than typical office buildings, it said citing data from the US Energy Information Administration, adding that they are usually in operation continuously which signals constantly high energy consumption.

It also cited data from the European Commission which estimates that electricity consumption of all data centres in the European Union was at 76.8TWh in 2018, accounting for about 2.7% of the Union’s electricity consumption.