The grid before the plan: data centres are joining India's peak the costliest way

At 3:47 pm on 21 May 2026, India asked its grid for more power than it ever had: 270.82 GW. It was the fourth record in four days, after 257.37 GW, 260.45 GW and 265.44 GW. The Power Ministry put the surge down to cooling appliances. Some of that number was your air-conditioner.

Some of it was a building that has no afternoon. A data centre runs continuously, with what CEEW calls "near-zero tolerance for downtime". It was inside the 270.82. It will be inside every record after it, and the plan is for it to be a much bigger part of them.

The size of the load today

Small. CEEW's February 2026 white paper puts data centres at about 0.5 per cent of national electricity consumption in 2024. Wood Mackenzie puts their use at 10 TWh in 2025. India's total energy requirement in FY25 was about 1,694 TWh, per the Ministry of Power.

Spread 10 TWh across the 8,760 hours of a year and you get an average draw of about 1.1 GW. Against this May's peak, that is 0.4 per cent. (What a data centre megawatt is, and isn't, is explained here.)

The size of the load planned

Wood Mackenzie's July 2026 report projects India's operational data centre capacity rising from 2.2 GW in 2025 to 12 GW in 2030, of which AI-dedicated capacity goes from 275 MW to 6,546 MW. Electricity use goes from 10 TWh to 191 TWh by 2040, which it says would be 7 per cent of national demand.

Run the same arithmetic on 191 TWh: about 21.8 GW of round-the-clock load. That is 8 per cent of this May's record, present in every hour of every day. Other houses are lower; IEEFA's 2025 estimate was 9 GW of capacity and about 3 per cent of electricity by 2030. Nobody's projection is small.

Why it lands at the expensive hour

Read the peak closely. On 21 May, demand stayed above 260 GW for about three hours, between 2 pm and 5 pm, according to Down To Earth's reading of Ministry of Power data. The shortage during solar hours was 0.18 GW. After sunset it was 2.57 GW, and coal generation rose from 171.7 GW at the peak to a maximum of 184.9 GW once solar faded. The hardest hour is when the sun leaves. A flat load is there then too. Exchange prices noticed: the day-ahead average on IEX in May was ₹4.88 a unit, up 18.3 per cent on a year earlier.

Operators care about that price. CEEW, citing DCD, puts energy at 60 to 70 per cent of a data centre's operating cost. But their contracts care more about uptime. CEEW's interviews found that "even microsecond-scale power disturbances" can trigger penalties, so UPS and diesel gensets are treated as an "inherent design requirement".

Then the rulebook. The Central Electricity Authority's Manual on Transmission Planning Criteria, in force from 15 October 2026, lists data centres as critical loads that "shall plan their interconnection with the grid, with 100% redundancy", from two sources where possible. For every megawatt of campus, the plan carries two megawatts of connection.

And no market pays a data centre to bend. CEEW names the gap: no clearly priced ancillary services and limited revenue-stacking for storage. So every gigawatt of compute is contracted as firm demand, at peak, with a spare. That is the most expensive way to add it.

The discom's side of the bill

The cheaper electrons come from elsewhere. KPMG counts more than 3 GW of renewable PPAs announced by data centre operators, about 15 per cent of all such PPAs in India. CEEW describes the structure: full-capacity grid connections from the discom for reliability, with part of the demand met through open access, captive or group captive renewables.

The discom plans for the peak it has promised and sells less than it planned for. CEEW's words: "under-utilised or stranded capacity", fixed costs socialised "among other consumers", and pressure on discoms to discourage the very renewable procurement the government promotes. Operators, for their part, list cross-subsidy surcharges, additional surcharges and withdrawn waivers as their top regulatory frictions.

Maharashtra contributed the most to the 21 May peak, 31.5 GW. It is also home to Mumbai, which on CBRE's count holds more than half of India's operational data centre stock. The trap and the cluster are in the same state.

Storage is the exit. CEEW's interviewees expect batteries to become central to data centre power design in three to five years, and say about 80 per cent renewable supply is feasible with diversified solar, wind and storage; 24/7 on 100 per cent renewables remains "technically challenging". Water is the other bill (the building that drinks).

What the numbers don't tell you

How much of the 270.82 GW was data centres. Nobody publishes it; national dispatch data does not break the load out, and the 0.5 per cent figure is itself an estimate that CEEW cites from a Cornell study. We found no public register of diesel capacity installed at Indian campuses. And the projections disagree with each other before they disagree with reality: Wood Mackenzie starts 2025 at 2.2 GW; CBRE, Vayam's house series, counted just over 1,700 MW at the end of that year.

What to watch: the CEA's draft Technical Standards for Connectivity to the Grid, whose comment window closed on 2 September 2026; and the first Indian data centre paid by the grid for flexibility rather than charged for firmness.