30 August 2024 India | Utilities | Sector Report

Utilities
Data Centre: Estimating power demand

Indian users in 2023 consumed 24.1 GB of data per capita per month, which is expected to Sudhanshu Bansal
sudhanshu.bansal@jmfl.com | Tel: (91 22) 66303128
reach around 28 GB/ 62 GB in 2024/ 2028, outpacing developed markets like the U.S.,
Krishnakant Phafat
Western Europe, South Korea, and China. Data Centre Concentration (data centre capacity in Krishnakant.Phafat@jmfl.com | Tel: (91 22) 6630 3563
MW per Internet user in million) depends upon the population (India 1.4bn/1.5bn in
2024/2030E) and the internet penetration (India 50% existing). India has the one of the We acknowledge the support of Rajat Gupta in
lowest data centre concentration, 1.2 (3.6 for China) which is likely to grow around 3.0 in the preparation of this report
2026 and may exceed 6-7 by 2030 driven by low cost data, regulatory push for data
localization, higher adoption of 5G, and others. We estimate that India's data centre capacity
could reach approx. 8.5-9.5 GW by 2030, contributing 7-8% of incremental peak power
demand.
 Data centre: A data centre is a secure, centralized facility housing computing and
networking equipment to collect, store, process, and distribute large amounts of data. It
comprises servers, storage systems, and networking devices, supported by essential
infrastructure like power, cooling, and backup systems. Data centres operate continuously
to meet growing demands for cloud computing, AI, digital media, and other services.
 Landscape: India with an operational capacity of 1,074MW has emerged as the 13th
largest data centre market globally, with 163 data centres as of Mar’24 driven by IT
sector, global capability centres (GCC), the expanding digital economy, and the shift to
hybrid workplaces. India is projected to lead global data consumption, reaching 62GB per
user per month by 2028, outpacing developed markets like the U.S., Western Europe,
South Korea, and China.
 Power Consumption in Data Centres: Electricity demand in data centres is primarily driven
by computing (Network devices, Servers, Servers racks, Cables and Internet, Storage) and
cooling, each accounting for around 40% of consumption. The remaining 20% is used by
other IT equipment, including cyber security systems, firewalls, power conditioning, and
environmental monitoring.
 Global Electricity demand from data centres: Data centres consumed 460TWh, 2% of
global electricity in 2022 which is likely to increase to 1000 TWh by 2026.
 Key metrics: Power Usage Effectiveness (PUE) measures the efficiency of a data centre by
dividing total facility power by the power used by IT equipment. An ideal PUE is 1.0,
indicating perfect efficiency. Since 2022, the average PUE has stabilized at around 1.5.
Data Centre Concentration (DCC) measures the data centre capacity in MW per million
internet users and depends on population (India 1.4bn/1.5bn in 2024/2030E) and internet
penetration (India 50% existing). India currently has one of the lowest DCC rates at 1.2
compared to China's 3.6. In 2023, Indian users averaged 24.1 GB of data consumption
per capita per month, projected to reach 28 GB in 2024.
 Estimating power requirement: In 2017, China's Data Centre Concentration (DCC) was
~0.6, rising to ~3.6 by 2023. India has followed a similar trajectory, increasing from 0.6 in
2020 to 1.25 in 2023, and is expected to reach 3.0 by 2026 and exceed 6-7 by 2030.
This anticipated growth is driven by factors such as affordable data costs, regulatory
pushes for data localization, and increased 5G adoption. Consequently, India's data
centre capacity could reach approximately 8.5-9.5 GW by 2030, contributing 7-8% to the
country's incremental peak power demand by FY32.
 Perspective on Utilities: Indian power sector is at inflexion point with energy/peak demand
growing at 8.6%/ 11.5% during YTDFY25, significantly higher than earlier levels JM Financial Research is also available on:
4%/3.8% during 7MFY24 and 14.5%/6.3% during 7MFY23. Going forward, current Bloomberg - JMFR <GO>,
peak power demand of 250GW is expected to exceed 366GW in FY32 as estimated in Thomson Publisher & Reuters,
S&P Capital IQ, FactSet and Visible Alpha
National Electricity Plan driven by new drivers of growth viz. data centres, electrification of
industry and extreme weather. We currently have a BUY rating on NTPC (TP – INR 451),
Please see Appendix I at the end of this
Power Grid (TP – INR 381), Coal India (TP – INR 601), Tata Power (TP – INR 491), JSW report for Important Disclosures and
Energy (TP – INR 793), NHPC (TP-91), Suzlon (TP- 72), BHEL (TP-361), CESC (TP – INR Disclaimers and Research Analyst
201), Torrent Power (TP- INR 1791). We have a SELL rating on SJVN (TP-INR 71). Certification.

JM Financial Institutional Securities Limited

Utilities 30 August 2024

Data Centre: Estimating power demand

What is data centre?
Data Centre is a dedicated secure space within a building / centralized location where
computing and networking equipment is concentrated for the purpose of collecting, storing,
processing, distributing or allowing access to large amounts of data. It’s where information is
processed and made available.

Need
Often, organizations start with their own modest buildings made up of a few server racks,
requiring maintenance, cooling, and handling increasing demand. As their sizes grow, many
companies turn to cloud services providers like Google Cloud. These providers of data centres
are emerging into large campuses with multiple buildings. The companies and users, through
cloud services benefit from their scale due to multitenancy (a software architecture in which a
single instance of software runs on a server and serves multiple tenants).

Core Components of Data Centre

Data centres are generally made up of racks (servers are stacked with each other), cabinets,
cables, and many more. Its design integrates a variety of components such as routers,
switches, firewalls, storage systems, servers, and application delivery controllers. To support
the centre's hardware and software, it requires significant infrastructure like power
subsystems, uninterruptible power supplies (UPS), ventilation, cooling systems, fire
suppression, backup generators, and connections to external networks.

The system run continuously to meet expanding demand for cloud-based computing, digital
storage, artificial intelligence, digital gaming, streaming music and movies, data analytics, and
other services.

Exhibit 1. Layout of data centre

Source: Wilcon, JM Financial

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Utilities 30 August 2024

Types of data centres

The classification of data centres depends on whether they are owned by one or many
organizations, how they fit (if they fit) into the topology of other data centres, what
technologies they use for computing and storage, and even their energy efficiency.

Exhibit 2. Types of data centres

Type Description

Enterprise owned by company used to process internal data

Colocation rental space where enterprises can lease fully equipped data centre facilities

located off-premises or across multiple sites; managed by a third-party provider viz. AWS, Google
Cloud
Cloud
Similar to colocation centres but with added managed services such as monitoring, maintenance,
Managed Services
and support for IT infrastructure
made up of tens of thousands servers, process big data, support cloud computing and serve billions
of users for services like Chrome, Maps, Gmail, Search, and Google Cloud. These facilities usually
Hyperscale
exceed 10,000 square feet and house over 500 cabinets and 5,000 servers connected via a high-
speed network.
Smaller data centre that is as close to the end user as possible to reduce latency for real time
Edge
applications, support edge computing and IoT applications
Source: Industry, JM Financial

Global landscape
Globally there are more than 8000 data centres with about 40% of these located in USA,
16% in Europe and 10% in China.

Exhibit 3. Countries with number of data centres (2023)

Source: Colliers, Industry, JM Financial

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Utilities 30 August 2024

India landscape
The cloud market in India experienced a 44% CAGR from 2016 to 2021, while average
monthly data traffic per user rose to 24 GB over the past three years, increasing by 2-2.5
times. Data consumption surged sevenfold between 2018 and 2021, and the internet user
base expanded to over 900 million, tripling from 277 million in 2015. The e-commerce
market doubled from 2017 to 2022 and is projected to reach USD 350 billion by 2030.

Therefore, India has emerged as the 13th largest data centre market globally, with 163 data
centres as of March 2024, and has experienced a CAGR of 28-32% in data centre capacity
driven by IT sector, global capability centres (GCC), the expanding digital economy, and the
shift to hybrid workplaces. This was supported by world's lowest data usage charges at USD
0.08 per GB and 60% lower development and land costs vis-à-vis that in in mature regions.

Leading the Asia Pacific region in under-construction data centre capacity with nearly 1GW,
representing over a quarter of the region's total, India's operational capacity stands at 1,074
MW, placing it among markets like Mainland China (4GW), Japan (1.3GW), and Australia
(1,168MW). Future growth is expected due to a thriving digital economy, widespread
internet access, and the transition to 5G networks, with government efforts focusing on
stable data centre infrastructure to ensure uninterrupted internet access, data security, and
cloud computing. With 759 million active internet users expected to reach 900 million by
2025, India surpasses the U.S.'s 307.34 million users in 2022 and China's 1.05 billion users.
According to the Ericsson Mobility Report (June 2023), India is projected to lead global data
consumption, reaching 62GB per user per month by 2028, outpacing developed markets like
the U.S., Western Europe, South Korea, and China. Additionally, Mumbai has become the
largest powerhouse market in Asia Pacific, surpassing Beijing, despite not yet matching the
live capacities of Beijing, Tokyo, Shanghai, and Sydney.

Exhibit 4. Data centres installed capacity of India (MW)

1200 1074
1000
854
800 680 722

600

400 350
282
200

0
2018 2019 2021 2022 2023 YTD24
Source: CRISIL, JLL, Industry, JM Financial

The 7 major cities account for more than 90-95% of the total demand and supply in India,
led by Mumbai and Chennai (~60% share) due to their dense undersea cable ecosystems.

Exhibit 5. India’s Data Centre Capacity in MW (Top 7 cities in 2023)

Cities Operational Under Construction Planned

Mumbai 531 301 916

Pune 53 27 13

Bengaluru 95 55 23

Chennai 144 182 152

Kolkata 5 52 -

Delhi & NCR 113 109 139

Hyderabad 36 92 261
Source: C&W report, Industry, JM Financial

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Utilities 30 August 2024

Key Developments in Data Centre Policy and Regulation

 RBI Guidelines, 2018: Mandates payment service providers to store payment system data
within India for at least six months.

 Draft National E-commerce Policy, 2019: Aims to develop a governance framework for
data localization, consumer protection, and promotion of MSMEs and start-ups.

 Draft Data Centre Policy, Nov’20: Sets standards for authorization and operationalization
of data centres.

 Infrastructure Status: Data centres were granted 'infrastructure' status in Oct’22,

following the Finance Minister’s 2022 budget address.

 State Policies: Karnataka, Tamil Nadu, Uttar Pradesh, Odisha, Telangana, Maharashtra,
and West Bengal have introduced policies to attract data centre investments.

 TRAI Recommendations (Nov’22): Proposes a regulatory framework to foster growth in

data centres, content delivery networks, and interconnect exchanges.

 Digital Personal Data Protection Act, 2023: Requires businesses to invest in local data
centres and data processing operations.

Power Consumption in Data Centres

The data centres are power guzzlers to the extent that their capacity is described in MW due
to the constant processing and storage of data, demand for high-performance computing,
and the need for cooling.
Electricity demand in data centres is mainly from two processes, with computing ((Network
devices, Servers, Servers racks, Cables and Internet, Storage) accounting for 40% of electricity
demand of a data centre. Cooling requirements to achieve stable processing efficiency
similarly makes up about another 40%. The remaining 20% comes from other associated IT
equipment (Cyber security systems, Firewalls, Power conditioning equipment, Environmental
monitors, Fire suppression systems, and redundant power sources).

Exhibit 6. Data centre energy consumption

10%

40%

40%

5%
5%

Server Communication equipment

Storage device Cooling system
Power supply system
Source: ABB, Industry, JM Financial

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Global Electricity demand from data centres

It is estimated (IEA) that data centres consumed 460TWh, 2% of global energy in 2022 which
is likely to increase to 1000TWh by 2026.

Exhibit 7. Electricity consumption (TWh) from Data Centres 2010-2030

Source: MDPI, Industry, JM Financial

Key Performance Parameters

The PUE Ratio: A metric for Efficiency
The performance of a data centre in terms of power consumption is measured in units of
Power Usage Effectiveness (PUE). PUE is a limited-focus design, real-time and annual
measurement of the total facility power divided by the power consumed by IT equipment, or
a measurement of energy ‘waste’ going to non-IT equipment purposes.

PUE =

An ideal PUE is 1.0, that means 100% efficiency (i.e., all energy consumed is used only on IT
equipment with no distribution loses or waste). The average PUE ratio for a data centre in
2007/2020 was 2.5/1.58 which improved to 1.55 in 2022. Since, 2022 PUE is stable,
hovering around 1.5.

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Utilities 30 August 2024

Data Centre Concentration (DCC)

The Data Centre Capacity in MW per Internet User in million is defined as DCC which
depends upon the population and the internet penetration.
India has the one of the lowest data centre concentration among the nations.

Exhibit 8. Country-wise data centre concentration

7000
United States
6000
Number of data centres

5000

4000

3000

2000
China Europe
1000
India South Korea
0
-5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0
-1000
Data Centre Concentration

Source: JM Financial, Industry *Size of the bubble indicates the data centre capacity in the particular region.

Population
India is estimated to have more than 1.4 billion people. China, too, has more than 1.4 billion
people, but while China’s population is declining, India’s continues to grow. People under the
age of 25 years account for more than 40% of India’s population. Under the UN’s “medium
variant” projection, a middle-of-the-road estimate, India’s population will surpass 1.5 billion
people by the end of this decade and will continue to slowly increase until 2064, when it will
peak at 1.7 billion people.
Internet Penetration
China leads the world with 1 billion internet users and a 77% penetration rate, while the
USA boasts nearly 99% penetration. India, currently at 700 million users with a 50%
penetration rate, is rapidly catching up. By the end of the decade, driven by urbanization,
increased smartphone adoption among the younger population, and digital initiatives, India is
expected to reach a 90% penetration rate, positioning itself as a potential major data centre
hub in Asia.

Exhibit 9. Internet penetration

120%

100%

80%

60%

40%

20%

0%

China India USA

Source: Industry, JM Financial

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Utilities 30 August 2024

Data Consumption
The launch of 5G in India has significantly transformed the country's digital landscape,
leading to a substantial increase in data consumption, with 5G users consuming up to 3.6
times more data than 4G users. Over the past five years, mobile data traffic has grown at a
CAGR of 26%, reaching 17.4 exabytes (EB) per month in 2023.
India's average mobile data consumption per user per year has consistently surpassed that of
China, driven by rapid smartphone adoption and affordable data plans. In 2023, Indian users
consumed an average of 24.1 GB of data per capita per month, according to the 11th edition
of Nokia’s Mobile Broadband Index (MBiT), which is expected to reach around 28 GB by
2024.

Exhibit 10. Monthly average data consumption (GB) per user

30

25
CAGR 21.10%
20
CAGR 24%

15 India
China
10

0
2019 2020 2021 2022 2023
Source: Industry, JM Financial

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Utilities 30 August 2024

Estimating power requirement

In 2017, China's DC concentration was 0.6, which more than doubled to 1.2 in 2020,
growing at a robust CAGR of 32%. Subsequently, it nearly tripled (3.6) in 2023, achieving a
CAGR of 40%. China's State Grid Energy Research Institute expects electricity demand in the
country’s data centre sector to double to 400 TWh by 2030, compared to 2020.

Exhibit 11. Key data centre metrics: India and China

China China China India India India
Parameters
in 2017 in 2020 in 2023 in 2020 in 2023 in 2030E

Internet
55.8% 70.4% 76.4% 43.4% 51.5% 80%
Penetration

Population
1.4 1.424 1.425 1.39 1.428 1.515
(Billion)

Technology 4G (83%), 4G (79%), 4G (64%), 4G (65%), 4G (59%), 4G (35%),

Adoption 5G (0%) 5G (10%) 5G (33%) 5G (0%) 5G (17%) 5G (56%)

Data Centre
0.6 1.3 3.6 0.6 1.2 7-8
Concentration

Source: Industry, JM Financial

India exhibits a striking parallel with China. In 2020, its data centre concentration stood at
0.6, mirroring China in 2017. Over the next three years, this doubled to 1.25. We believe,
India might be on the cusp of mirroring China's explosive growth.

Exhibit 12. Data centre concentration (MW/mn internet users), India and China
10

0
2017 2020 2023 2020 2023 2026 E 2029/
2030 E
China India

Source: Industry, JM Financial

The data centre concentration is likely to grow around 3.0 in 2026 and may exceed 7-8 by
2030 driven by multiple factors viz. low cost data, regulatory push for data localization,
higher adoption of 5G, and others.

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Utilities 30 August 2024

Exhibit 13. 2030 Data centre capacity (GW) estimate: Sensitivity analysis
DC capacity Data Centre Concentration (MW/mn internet users)
(GW) 12 1 2 3 4 5 6 7 8 9 10 11 12 13

50% 0.8 1.5 2.3 3.0 3.8 4.5 5.3 6.1 6.8 7.6 8.3 9.1 9.8

55% 0.8 1.7 2.5 3.3 4.2 5.0 5.8 6.7 7.5 8.3 9.2 10.0 10.8

60% 0.9 1.8 2.7 3.6 4.5 5.5 6.4 7.3 8.2 9.1 10.0 10.9 11.8
Internet penetration

70% 1.1 2.1 3.2 4.2 5.3 6.4 7.4 8.5 9.5 10.6 11.7 12.7 13.8

75% 1.1 2.3 3.4 4.5 5.7 6.8 8.0 9.1 10.2 11.4 12.5 13.6 14.8

80% 1.2 2.4 3.6 4.8 6.1 7.3 8.5 9.7 10.9 12.1 13.3 14.5 15.8

85% 1.3 2.6 3.9 5.2 6.4 7.7 9.0 10.3 11.6 12.9 14.2 15.5 16.7

90% 1.4 2.7 4.1 5.5 6.8 8.2 9.5 10.9 12.3 13.6 15.0 16.4 17.7

95% 1.4 2.9 4.3 5.8 7.2 8.6 10.1 11.5 13.0 14.4 15.8 17.3 18.7

99% 1.5 3.0 4.5 6.0 7.5 9.0 10.5 12.0 13.5 15.0 16.5 18.0 19.5
Source: Industry, JM Financial

World Economic Forum (WEF) estimates that 1.1 billion Indians will have access to the
internet by 2030 implying an internet penetration ratio of around 85%.
Navigating future trends in the data centre sector is complex due to rapid technological
advancements and the evolving landscape of digital services. Based on the pace of
deployment, efficiency improvements, and the influence of trends like artificial intelligence
and crypto currency, we estimate that India's data centre capacity (= DCC x internet
penetration x population) could reach approx. 8.5-9.5 GW by 2030, with a concentration
ratio of around 7.

Implications on power sector

Data centres require a reliable power supply because power outages can cause data loss,
system downtime, and negatively impact a business's operations.
India witnessed a peak power demand of 250GW on 30 May’24. The peak demand as per
National Electricity Plan is estimated to reach 366.4GW by FY32, which is likely to be revised
upwards. Hence, we estimate that 7-8% of incremental peak power demand is likely to come
from data centres.

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Utilities 30 August 2024

APPENDIX I

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Buy Total expected returns of more than 10% for stocks with market capitalisation in excess of INR 200 billion and REITs* and more than
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the U.S., JM Financial Institutional Securities has an affiliate, JM Financial Securities, Inc. located at 1325 Avenue of the Americas, 28th Floor, Office No. 2821,
New York, New York 10019. Telephone +1 (332) 900 4958 which is registered with the SEC and is a member of FINRA and SIPC.
Additional disclosure only for U.K. persons: Neither JM Financial Institutional Securities nor any of its affiliates is authorised in the United Kingdom (U.K.) by the
Financial Conduct Authority. As a result, this report is for distribution only to persons who (i) have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii)
are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order, (iii) are outside
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Services and Markets Act 2000) in connection with the matters to which this report relates may otherwise lawfully be communicated or caused to be
communicated (all such persons together being referred to as "relevant persons"). This report is directed only at relevant persons and must not be acted on or
relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will
be engaged in only with relevant persons.
Additional disclosure only for Canadian persons: This report is not, and under no circumstances is to be construed as, an advertisement or a public offering of the
securities described herein in Canada or any province or territory thereof. Under no circumstances is this report to be construed as an offer to sell securities or as
a solicitation of an offer to buy securities in any jurisdiction of Canada. Any offer or sale of the securities described herein in Canada will be made only under an
exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable
securities laws or, alternatively, pursuant to an exemption from the registration requirement in the relevant province or territory of Canada in which such offer or
sale is made. This report is not, and under no circumstances is it to be construed as, a prospectus or an offering memorandum. No securities commission or
similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information contained herein or the merits of the securities
described herein and any representation to the contrary is an offence. If you are located in Canada, this report has been made available to you based on your
representation that you are an “accredited investor” as such term is defined in National Instrument 45-106 Prospectus Exemptions and a “permitted client” as
such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Under no circumstances is the
information contained herein to be construed as investment advice in any province or territory of Canada nor should it be construed as being tailored to the
needs of the recipient. Canadian recipients are advised that JM Financial Securities, Inc., JM Financial Institutional Securities Limited, their affiliates and authorized
agents are not responsible for, nor do they accept, any liability whatsoever for any direct or consequential loss arising from any use of this research report or the
information contained herein.

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