In July, the North Eastern Regional Power Committee (NERPC) convened a special meeting with grid operators and Power Grid Corporation of India Ltd. (PGCIL) to address an urgent issue: maintenance contracts for the region’s integrated electricity grid were nearing expiry, necessitating discussions on upgrading the systems.
The financial implications were significant. PGCIL informed the meeting that the estimated cost of upgrading the Supervisory Control and Data Acquisition/Energy Management System (SCADA/EMS) at the region’s State Load Despatch Centres had risen from ₹521 crore to about ₹688 crore. The reason: AI-driven demand was making hardware used in supervisory systems more expensive.
Escalating costs are not new to the power sector. As manufacturers phase out older components and specialists capable of maintaining legacy systems become harder to find, replacement and maintenance costs can rise sharply. However, the rapid expansion of data-centre projects is adding a new layer of pressure on power generation and transmission infrastructure.
Ramping concerns
NERPC is not the only regional body grappling with the implications of AI-driven electricity demand.
At a meeting of the Eastern Regional Power Committee’s Technical Coordination Committee last December, an Odisha representative flagged the potential “ramping impact” on States when industries such as data centres undertake “bulk collective purchase” of electricity.
Such fluctuations can strain slow-ramping generators, which cannot adjust output quickly enough to match sudden changes in demand. This could expose generators to penalties under the Deviation Settlement Mechanism (DSM) for deviations beyond their control.
AI data centres consume substantially more power than conventional facilities. Their demand patterns can also fluctuate sharply, depending on usage, especially LLMs, server distribution and the time zones of their customers.
The issue reached the Central Electricity Authority’s National Power Committee in February. Minutes of its meeting noted that “data centres typically exhibit high constant loads, with possible ramping characteristics depending on global time zones and server distribution”.
A committee constituted by Grid-India was tasked with studying data-centre electricity demand patterns, media reports suggest.
Alok Kumar, Director-General of the All-India Discoms Association (AIDA), told The Hindu that the incremental demand from data centres would remain manageable.
“An incremental demand from data centres ranging between one and two gigawatts per year will not make a huge difference,” he said, adding that “[moreover], this would be concentrated in certain cities only, like in Hyderabad, Mumbai, Chennai, Visakhapatnam and the Delhi NCR region, among others.”
However, the final leg of electricity transmission could pose a challenge. State transmission utilities would need to expand capacity quickly in locations witnessing a concentration of data-centre projects.
“State transmission utilities would have to quickly upgrade where there is demand and within time. It could be a challenge in certain urban areas because of right of way (RoW)-related issues,” Mr. Kumar said.
Nationwide deliberations
Concerns over data-centre loads and their implications for grid stability have surfaced across regional power committees.
At meetings of the Northern Regional Power Committee’s Operation Coordination Sub-Committee last year, officials repeatedly discussed monitoring data centres’ compliance with grid-connection requirements before supplying them with electricity.
In an email in February, the Northern Regional Load Despatch Centre, which oversees the region’s grid, warned that data centres could switch to backup power systems rapidly, creating a “credible risk of abrupt load rejection”.
Documents showed that Noida had 125 MW of operational data-centre capacity, with more than four times that capacity in the pipeline.
The Southern Regional Power Committee, meanwhile, has been preparing for a surge in demand from data-centre projects in Visakhapatnam (Google was not named in the discussions, it is the largest planned project in the area). Officials discussed the prospect of gigawatt-scale demand emerging in the region over the coming months.
At an April meeting, the SRPC’s Protection Coordination Sub-Committee examined the implications of data centres for transmission infrastructure. An official noted in the opening remarks that “inputs were sought from Grid-India to assess reserve requirements and system planning implications”.
Who pays for upgrades?
Mr. Kumar said the cost of upgrades should not become a broader financial burden, as transmission investments would ultimately be recovered through transmission charges.
However, he emphasised that data-centre operators must bear the costs of additional investments required to extend transmission infrastructure to their facilities. Such expenditure, he argued, should not be passed on to all consumers of the same distribution company.
Mr. Kumar pointed to Central Electricity Regulatory Commission (CERC) regulations that mandate this principle.
Line faults expose vulnerabilities
Maharashtra, home to a large share of India’s data centres, has long benefited from demand generated by the banking and financial services industry.
Yet the concentration of these facilities is also increasing the importance of grid reliability. Minutes of a Western Regional Power Committee meeting last year recorded discussions on a grid incident on June 12, when a faulty bus caused two interconnecting transformers to trip, resulting in the shedding of about 32 MW of data-centre load.
At a meeting in January, an official also warned that the proposed splitting (“line-in line-out”), of the Talegaon-Kharghar transmission line could leave the already stressed corridor vulnerable to severe overloading if another line tripped. The corridor serves an area experiencing growing data-centre development around Mumbai.
The official, from Maharashtra State Electricity Distribution Company Limited, suggested upgrading the line to 2,100 MVA.