By IndraStra Global News Team
According to sources familiar with the matter, the Adani Group has shown strategic foresight by accelerating its $4 billion plan to expand its data center business in India. The goal is to tap into the rising demand for data center services from tech giants and boost its power business by meeting the substantial energy needs of these facilities.
Adani ConneX Pvt. Ltd., a joint venture between Adani Enterprises Ltd. and U.S.-based EdgeConneX, currently operates 17 MW and has 210 MW of projects under construction. Due to soaring demand, the group aims to reach a 1-1.5 GW data center capacity within one to two years, much sooner than the original five-year timeline.
"Adani will invest another $4 billion to reach this 1 GW. Based on present economics, investment per MW is around ₹40 crore," one source revealed to the Indian media portal livemint.com
According to the sources, the rapid growth in data center demand has prompted the Adani Group to consider slowing investments in other businesses to allocate more funds to its data center expansion as part of a strategic shift. This rapid growth underscores the urgency and potential of the data center market.
"AdaniConneX has an order visibility of 1.5-2 GW. This means our share, which with 1 GW could have been 25%, is expected to go up significantly," said one source. Adani Group holds only a 2.5% share of India's 700 MW data center market, which is projected to grow to 4 GW by FY30.
"AdaniConneX has order visibility of 1.5-2 GW, meaning our market share, which would have been 25% with 1 GW, is expected to rise significantly," the source added.
The expansion will also boost the group's power generation businesses. Adani Power Ltd. and Adani Green Energy Ltd. AI-driven services like WhatsApp, Google, and Facebook typically require 8 to 12 times more power than non-AI computational tasks, benefiting the group's power demand.
The surge in demand for data center services has prompted major Indian players, including Nxtra by Airtel, Brookfield-RIL, and Hiranandani's Yotta Data Centers, to enter expansion mode alongside Adani.
"We are continuing a strong expansion drive and are increasing our capacity exponentially to meet the growing digital demand in India," said Ashish Arora, CEO of Nxtra by Airtel. Nxtra currently operates the most significant data center network in India, with over 200 MW capacity, and plans to invest $660 million by 2026 to double its capacity to 400 MW across cities such as Mumbai, Pune, Kolkata, Chennai, Hyderabad, Delhi-NCR, and Bengaluru.
Digital Connexion, a joint venture involving Digital Realty, Brookfield Asset Management, and Reliance Industries Ltd (RIL), opened its first data center campus near Chennai in January 2024. This facility offers cloud- and carrier-neutral data center, co-location, and interconnection solutions. Due to increasing demand, the company anticipates scaling its capacity from 20 MW to 160 MW in Chennai and Mumbai over the next two to three years. "There's a lot that's needed," remarked Arpit Agrawal, managing partner and head of India and the Middle East for Brookfield's Infrastructure Group.
Agrawal noted that India's overall data center capacity is currently below a gigawatt, but he expects it to grow fivefold by 2030. This projection underscores India's increasing importance in the global data center market and the potential for significant growth in the coming years.
Meanwhile, Yotta Data Services Pvt Ltd, led by the Hiranandani Group, has significant expansion and investment plans underway. Darshan Hiranandani, chairman and co-founder of Yotta, stated that the company intends to launch its public cloud, similar to those offered by Google, Amazon, and Microsoft.
"We are providing AI capacity. In that space, we are continuing to expand. And as our first, we'll put space in our Mumbai data center, then in our Delhi data centers," Hiranandani said, highlighting that the demand in India is driven by local cloudification.
"Our data centers, given the level of internet usage, population, and GDP, are still relatively low. Based on our current income levels, we should have about two to three times the existing amount of data centers," he added, noting that in the next 12 to 18 months, capacity will primarily serve Indian consumers before addressing demand from other regions.
Yotta has ordered 16,000 GPUs for its data centers this year, with a $500 million investment solely for chips, according to Hiranandani. A report by The Economic Times on August 19 cited Yotta's CEO, Sunil Gupta, stating that about 75% of the H100 graphics processing units (GPUs) procured from U.S. chipmaker Nvidia are utilized by foreign companies, with the remainder used by Indian firms.
According to the earlier sources, Adani's renewed investment strategy for data centers is primarily driven by a critical power shortage faced by technology giants, with demand surging particularly in the last six months.
"Hyperscalers and colocation demand has suddenly intensified as top global hyperscalers are looking for the first-mover advantage," one source noted. Hyperscalers provide extensive computing resources through large-scale data centers, typically operating on an elastic cloud platform.
In its recent annual report, Adani Enterprises highlighted major hyperscale customers like Microsoft, Google, and AWS.
The power sector is central to the emerging AI revolution. The first source highlighted that on average, processing a ChatGPT query requires nearly ten times the electricity of a Google search, aside from other AI services from WhatsApp, Google, or Facebook. This underscores the increasing energy demands of advanced computing tasks and their impact on the power sector.
The source added that the energy consumption of Nvidia's H100 GPUs sold in 2023 could power 4 million people, more than 1% of the U.S. population.
A McKinsey report released last week indicated that data centers currently account for 3-4% of U.S. power demand, a figure expected to rise to 12% by FY30. Goldman Sachs made a similar forecast, predicting that global data centers, currently responsible for 1% of power consumption, could increase to 4% by FY30.
This growing power demand coincides with global companies racing to move away from fossil fuels and achieve net-zero emissions as soon as possible.
"That's why the demand in India could be even higher since many of the western countries do not have enough resources to provide clean energy," said the first source, highlighting the potential for India to meet global demand for clean energy and the country's promising future in the data center industry.
"Adani Green Energy Ltd. can generate, evacuate, and supply green power through Adani Energy Solutions Ltd.," the source added, emphasizing that this capability is crucial for the data center strategy, as power costs account for 60% of a data center's operational expenses.
Although Nxtra does not own a green energy generation plant, the company aims for net-zero emissions by 2031 and is implementing new green energy, water, and waste management technologies within its data center ecosystem, according to Arora.
"We are integrating energy-efficient cooling systems and harnessing new-age renewable energy sources, including hydrogen-ready fuel-cell technology," said Arora, noting that Nxtra is the only Indian data center firm committed to the RE100 initiative, which unites large businesses committed to 100% renewable electricity.
"We are ensuring all our new hyperscale data centers are designed to handle complex AI workloads through next-gen cooling technologies, scalable power infrastructure, and high structural floor loading, thus providing hyper scalers and enterprises a future-ready infrastructure to implement AI and other next-gen applications," Arora added.
Adani data centers focus on managing the core infrastructure that hyperscalers require for their AI and cloud-computing services, including power solutions, renewable energy, land banks, and engineering.
Adani is building data centers in Noida and Hyderabad, expecting the first phase to be completed by FY25.
In FY2024, AdaniConneX secured the most significant data center financing deal in India, with a $213 million construction financing facility from banks including ING Bank NV, Mizuho Bank, MUFG Bank, Natixis, Standard Chartered Bank, and Sumitomo Mitsui Banking Corporation.
Last year, AdaniConneX also acquired 100% stakes in Innovant Buildwell Pvt Ltd and Aviceda Infra Park Ltd.
According to the earlier sources, the rapid demand for data centers could boost revenues for AEL and AGEL and help the group diversify its client base, potentially turning these clients into customers for other Adani group businesses in the future.
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