Renewable Energy in Data Centres: Power, Scale and Sustainability

Introduction

Data centres depend on a constant supply of electricity, but securing enough power is challenging in many regions as digital infrastructure expands. India’s installed data centre IT capacity has already crossed 1.8 GW in H1 2026, and the development pipeline, including AI-dedicated capacity, could take total designed IT capacity beyond 10 GW by 2030. Based on current utilisation assumptions, this could translate into an estimated 9 GW of round-the-clock (RTC) power demand by 2030.

Against this backdrop, renewable energy is becoming an increasingly important part of how data centre operators plan, procure and manage power. At steady state, at least 50% of India’s data centre energy demand could be met through renewable energy sources.

Why Renewable Energy Matters in Data Centres

Data centres require large amounts of electricity and operate continuously throughout the day and night. As power requirements scale, renewable energy is being driven not only from sustainability perspective but also by economics, policy and long-term power planning.

Hyperscalers and cloud players are setting increasingly ambitious sustainability targets, with some already matching 100% of their power requirements with equivalent volumes of purchased clean energy. Data centre operators are also pursuing their own decarbonisation commitments. STTGDC India, for instance, has committed to achieving carbon-neutral data centre operations by 2030.

State Data Centre policies are another driver, with some requiring renewable energy use to qualify for incentives. At the same time, renewable power can offer tariff arbitrage compared with conventional Discom or grid power.

STTGDC India uses Captive Power Purchase Agreement (PPA), third party PPA, Discom’s Green Tariff offering and Energy Attribute Certificates (EACs), to increase its renewable energy footprints. STTGDC India achieved approximately 70% renewable energy in CY2025 and anticipates exceeding 75% in CY2026.

How Renewable Energy Supports Sustainable Data Centre Operations

Renewable energy has become an increasingly important part of data centre energy strategies, helping operators meet growing electricity requirements while supporting sustainability goals.

For large-scale data centres, renewable energy procurement is increasingly extending beyond individual projects to a combination of intra-state (InSTS) and inter-state (ISTS) renewable energy sources. Many facilities continue to draw power from the grid while supplementing their requirements through captive or third-party PPAs.

The next step is to combine Wind-Solar Hybrid (WSH) projects with energy storage such as Battery Energy Storage Systems (BESS) and Pumped Storage Projects (PSP). This could enable data centres to meet more than 85% of their power requirements through physical renewable energy, with the balance potentially met through Discom’s Green Tariff and/or EACs.

At STTGDC India, we have also initiated evening peak power sourcing through Firm and Dispatchable Renewable Energy (FDRE) sources supported by BESS, in CY2026. Going forward, we plan new renewable energy tie-ups through WSH combining with energy storage (BESS/PSP).

For many operators, the benefits of renewable energy in data centres extend beyond environmental goals and include long-term energy planning and greater electricity resilience.

Renewable Energy and the Push Toward Greener Infrastructure

For data centres that operate continuously, renewable energy strategies need to account for availability, reliability and the ability to meet power requirements round the clock (RTC). Reliability remains paramount. Almost all operating data centres in India are connected to the state grid, while some have received connectivity from the central grid also.

This means the transition to renewable energy is not about replacing the grid overnight but about developing a diversified power-supply stack that combines renewable energy (from WSH), renewable energy during peak hours (through energy storage) and grid power.

This becomes particularly important as data centre campuses scale to hundreds of megawatts. For GW-scale facilities connected at the Inter-State Transmission System (ISTS) level, apart from sourcing renewable energy from WSH, sourcing from energy storage including BESS/PSP will become increasingly important in ensuring better renewable energy footprints.

Challenges and Opportunities in Renewable-Powered Data Centres

Renewable energy sources do not always generate electricity consistently, creating challenges for facilities that operate continuously.

Data centres cannot reduce operations because electricity generation drops from the renewable energy sources for a few hours due to seasonal variation/weather conditions/lower wind profile etc.. Data Centres still need continuous electricity regardless of what is happening on renewable energy generation side, which means grid connectivity and DG backup system is inevitable.

Storage is becoming a critical part of this transition, although its economics remain an important consideration. Depending on the state, renewable energy bundled with FDRE or RTC solutions can deliver cost savings ranging from nil to 25%. However, high fixed and demand charges may continue when grid power is retained as backup. As storage costs decline, operators may increasingly be able to reduce their dependence on grid backup and associated fixed charges.

Transmission is another critical constraint. Inter-state renewable energy evacuation faces bottlenecks in certain corridors, including Rajasthan to other states and Maharashtra to Northern States, while some states also face technical and regulatory drawal-side constraints. Addressing these bottlenecks will be essential to enabling renewable capacity to scale alongside data centre demand.

At STTGDC India, we address many of these considerations during the planning stage rather than after a facility is built. Site selection decisions consider factors such as renewable energy access, water availability, environmental conditions, and long-term operational efficiency. Similar thinking carries through into facility design, where cooling systems, monitoring capabilities, sustainability requirements, and long-term data centre maintenance considerations are addressed from the outset. This helps sustainability become part of the development process rather than something added later.

What Renewable Energy Means for Enterprise Customers

For data centre operators, to tie-up renewable energy is inevitable due to various reasons provided above in para number two rather than simply a sustainability initiative and it’s a decisive factor for setting up new data centre. The ability to secure reliable renewable power can influence where new campuses are developed, how they are designed and how they plan for future expansion.

STTGDC India’s expansion is increasingly concentrated in states with strong renewable energy resources and policy support, including Maharashtra, Tamil Nadu and Karnataka. With new data centre campuses requiring approximately 200–1,000 MW power, adequate transmission infrastructure with spare capacity to meet ultimate load requirement has become the most important criterion for new site selection.

Renewable-rich states such as Gujarat and Rajasthan could also emerge as future data centre hubs, particularly where state data centre policies can support investment in both digital infrastructure and renewable energy. STTGDC India already operates data centres in Gujarat’s GIFT City and Jaipur, Rajasthan.

The Future of Renewable Energy in Data Centre Industry

Renewable energy is becoming a more practical consideration in data centre planning. But the next phase of adoption will depend on more than adding renewable energy generation capacity, it will require stronger transmission infrastructure, storage, diversified procurement models and a more predictable regulatory environment.

Today, open access, captive and group captive arrangements remain subject to state-level variations in rules, banking provisions and charges. Frequent change in Renewable Energy Policies at State level, its retrospective application to existing PPAs can make long-term power planning difficult. Delays in granting long-term open access are another challenge.

The industry therefore needs clearer regulatory timelines and greater predictability, ideally supported by a mechanism, that brings land, power and other approvals together. Any framework that improves the reliability and predictability of renewable energy delivery will support the next phase of data centre growth.

At STTGDC India, the transition is already shifting from renewable energy procurement to a more integrated model combining WSH, FDRE through energy storages e.g BESS and other storage solutions. With renewable energy reaching approximately 70% of consumption in CY2025 and a target of exceeding 75% in CY2026, the focus is now on building a power strategy that can support both sustainability and the reliability demanded by large-scale digital infrastructure.