The rapid expansion of AI data centres is reshaping global energy and infrastructure priorities in 2025. Demand for AI-ready computing capacity is growing at an unprecedented rate worldwide. India is emerging as a key player, with investments in data centre infrastructure. However, this growth poses challenges for energy systems and climate goals. The following notes provide a clear understanding of this evolving scenario.
Global Growth of AI Data Centres
AI data centre capacity is expanding at an annual rate of about 33 per cent. Nearly 70 per cent of this growth targets infrastructure capable of handling advanced AI workloads. This trend spans both developed and developing countries. The International Energy Agency (IEA) reports that data centres consumed 415 terawatt hours (TWh) in 2023, about 1.5 per cent of global electricity. This figure is expected to more than double by 2030, reaching 945 TWh, surpassing the current electricity use of Japan.
Energy Consumption and Grid Strain
The surge in data centre electricity demand strains national grids. Ireland is a cautionary example, where data centres used 21 per cent of electricity in 2023, causing blackouts and halting new approvals until 2028. Similar pressures are visible in the US, UK, Singapore, and China. These countries face challenges in balancing energy supply with the growing needs of AI infrastructure.
Fossil Fuel Reliance Amid Decarbonisation Efforts
Many regions are temporarily reverting to fossil fuels to meet AI data centre energy needs. In the US, retired coal plants are being repurposed to power data hubs. Pennsylvania’s Homer City plant is being transformed with a $10 billion investment to run gas turbines for AI centres. Georgia has delayed coal plant closures due to rising electricity demand. China’s data centres remain concentrated in coal-reliant provinces, denoting the tension between AI growth and clean energy goals.
India’s AI Infrastructure and Energy Dilemma
India’s data centre capacity reached 1,263 MW by April 2025, with investments expected to exceed $100 billion by 2027. Mumbai, Chennai, and Delhi NCR are key AI hubs. However, India’s electricity generation is over 70 per cent fossil fuel-based, stressing an ageing grid. Rapid AI data centre expansion risks worsening grid vulnerabilities unless managed with foresight.
Opportunities for Sustainable AI Growth in India
India can lead by integrating AI infrastructure growth with renewable energy and grid modernisation. Retired coal plants are being considered for nuclear projects, though not yet linked to AI demand. Adopting smart grids and efficiency standards can prevent carbon-intensive lock-in. This approach could make India a model for balancing digital innovation with energy transition.
Global Implications and Policy Directions
The rise of AI need not hinder decarbonisation. Proactive policies and public engagement can align data centre expansion with clean energy. This synergy can accelerate sustainable energy systems while meeting AI’s power needs. Thus, powering AI could become a catalyst for strengthening global energy transition efforts.
Questions for UPSC:
- Taking example of India and China, discuss the challenges and opportunities in balancing rapid digital infrastructure growth with sustainable energy transition.
- Examine the impact of large-scale data centres on national electricity grids and analyse measures to mitigate associated risks.
- With suitable examples, discuss the role of retired fossil fuel power plants in meeting emerging energy demands and critically discuss their implications for climate goals.
- Discuss in the light of global energy consumption trends how emerging technologies like AI can influence future energy policies and infrastructure planning.
