Hyderabad's 1-GW data centre raises concerns over power and water use

The decision to establish one of India's largest data centres, with a capacity of 1 GW, in Hyderabad is expected to provide a major boost to the city's technology sector and create thousands of direct and indirect jobs.

However, the proposed facility has also raised environmental concerns that are being debated globally in relation to large data centres. Questions are being raised over how Hyderabad, a city with limited water resources and no surplus power capacity, will meet the requirements of such a large facility.

Concerns have also emerged over whether the Telangana government has prepared a detailed plan to manage the additional demand for electricity and water while addressing other environmental issues.

Hyderabad already has more than 30 data centres, and environmental concerns are growing over whether another large 1-GW facility could put additional pressure on the city's existing resources.

Data centres require large amounts of electricity

Data centres house computer servers, data storage systems and network equipment used by organisations to store, manage, process and transmit large volumes of information. Since these facilities operate continuously, they require substantial amounts of electricity around the clock.

A 2024 study titled Environmental Burden of United States Data Centres in the Artificial Intelligence Era, conducted by researchers in the US, found that 2,132 data centres accounted for more than four per cent of total US electricity consumption between September 2023 and August 2024.

The study found that 56 per cent of the electricity used by these data centres came from fossil fuels.

The International Energy Agency (IEA) has projected that global electricity consumption by data centres will double by 2030 to around 945 terawatt-hours. This is roughly equivalent to Japan's annual electricity consumption and would account for three per cent of global electricity consumption in 2030.

Higher carbon emissions raise environmental concerns

The dependence on electricity generated from fossil fuels can increase carbon emissions and contribute to global warming.

The US study found that fossil fuels accounted for 56 per cent of the electricity consumed by the 2,132 data centres between September 2023 and August 2024. The resulting emissions were estimated at more than 105 million tonnes of CO2e, equivalent to 2.18 per cent of US emissions in 2023.

Dr. Donthi Narasimha Reddy, a public policy expert, said data centres could also contribute to higher temperatures because they operate continuously and generate significant amounts of heat.

“As the Data Centres operate round-the-clock, they generate a lot of heat and temperature around such centres is more compared to other areas. We recently petitioned with the union government seeking a notification of a distinct environmental impact assessment category for ‘Heat-Generating Centres’ including Data Centres, server farms, and comparable continuously heat-rejecting facilities under the EIA Notification, 2006. We have sought a mandatory public hearing for such centres,” he said.

Cooling systems could require millions of litres of water

The continuous operation of data centres generates heat inside the facilities, making cooling systems essential. Depending on the technology used, cooling can involve chilled air circulated through large ducts or chilled water flowing through piped cooling loops.

A recent IEA study estimates that a 100-MW data centre could consume roughly 2 million litres of water a day.

Based on that estimate, a 1-GW data centre in Hyderabad could require around 20 million litres of water a day, or approximately 7.3 billion litres a year.

A city-based water conservationist and environmentalist said Hyderabad's existing water challenges make it necessary for companies setting up data centres to contribute to conservation efforts.

“The city has already witnessed a water crisis even before the summer season commenced this year. We cannot stop the development but there is a need to increase the water footprint in the city. The companies that are setting up Data Centres should also take up water conservation projects,” the conservationist said.