Powering Data Centers and AI

India’s Electricity Demand Growth

• India’s electricity demand growth rate has historically been flat at around 5% for two decades.
• New key drivers that will steadily increase electricity consumption include:
  • Data centers and AI infrastructure.
  • Electric Vehicles (EVs).
  • Green Hydrogen programs.
  • 5G/Internet of Things (IoT) programs.

Exploding Demand for Data Centers and AI

• Demand Drivers: Data center growth in India is fueled by the government’s Digital India and data localization policies, increased data consumption, and the 5G rollout enabling data-intensive technologies like IoT and AI.
• Capacity Lag: India has twice the number of internet users as Europe but significantly lags in data center capacity (1.4 GW vs. Europe’s 10 GW).
• Projected Growth: India’s data center capacity is expected to grow two to three times by 2027 and over five-fold by 2030 (including large AI infrastructure).
• Power Intensity: AI data centers are computational powerhouses utilizing Graphic Processing Units (GPUs), with individual racks consuming 80-150 KW, significantly more than traditional servers (15-20 KW).
• Global Impact: Global data center electricity generation is projected to surge from 460 TWh in 2024 to over 1,000 TWh by 2030, with some regions seeing peak demand growth exceeding 25% due to GW-scale data centers.
• Locations in India: Visakhapatnam and Jamnagar have been chosen for GW-scale AI data center ambitions by Google and Reliance, respectively. Other plans are underway in Mumbai, Chennai, Bangalore, and Hyderabad.

Small Modular Reactors (SMRs) as a Low-Carbon Power Source

• Decarbonization Push: AI data centers are urgently seeking reliable, low-carbon baseload power due to corporate decarbonization targets and soaring energy demands.
• Current Power Mixes: Rely on a mix of intermittent renewables, natural gas, developing storage, and emerging alternatives like geothermal and Small Modular Reactors (SMRs).
• SMR Advantages: SMRs have caught the attention of Big Tech for their:
  • Flexible sizing (1 MW to 300 MW).
  • Factory manufacturing capability for cost savings.
  • Passive safety enhancements.
  • 24/7 stable baseload power production, eliminating the need for expensive, centralized transmission infrastructure.
• SMR Safety: Modern SMR designs use inherent and passive safety systems (like natural convection) to provide secure, reliable energy with a reduced likelihood of core-damaging accidents and smaller emergency planning zones.
• Read more on Small Modular Reactors. What are they?

India’s Strategy to Capitalize on SMRs

• Nuclear Mission: India’s budget initiated a Nuclear Energy Mission (₹120,000 crore outlay) aiming for 100 GW of nuclear capacity by 2047 and at least five indigenously manufactured SMRs in operation by 2033. Read more on Nuclear Energy in India
• Indigenous Development: Bhabha Atomic Research Centre is developing the BSMR-200 pressurized heavy water reactor and a 55 MW variant for remote areas.
• Reforms for Private Investment: The government is planning amendments to the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010 to attract an estimated $26 billion in private investment.
• Recommendations: India should leverage SMR technology transfer agreements, pre-approve existing coal sites and green hydrogen hubs for nuclear projects, and facilitate collaboration between SMR vendors, AI data center players, and renewable energy companies.

Regulatory and Logistical Challenges

• Regulatory Hurdles: Licensing processes, originally designed for large reactors, are time-consuming, expensive, and opaque and often don’t apply to advanced SMR technologies.
• Global Regulatory Reforms: Focus on six areas, including a technology-neutral framework, streamlined licensing (fleet approvals), and international harmonization (IAEA standards). Most jurisdictions aim for framework completion by 2026.
• Transportation and Waste: Regulations are needed for the security and radiation leakage risks associated with transporting factory-fabricated, fuel-loaded SMRs. New forms of radioactive waste from advanced fuels (like HALEU) require new disposal and storage plans.

PDF