Data center sector is likely to go from 0.9 GW in 2023 to 2GW by 2026: CareEdge

Data Centre industry grew:  data centre industry sector is now in a growth phase likely to register a doubling of capacity over next three years from approximately 0.9 Gigawatts (GW) in 2023 to around 2 GW by 2026, presenting substantial investment opportunities, report by CareEdge said on Wednesday. 

With impending surge in data centre capacity, investment prospects are ripe, with an estimated Rs 50,000 crore capex requirement in pipeline for next three years. Puja Jalan, Associate Director at CareEdge Ratings, highlights need to dress execution challenges to ensure successful realization of planned capacity ditions.

However, industry grapples with rising costs, with average cost per megawatt (MW) soaring to Rs. 60-70 crore from Rs. 40-45 crore. Despite this, absorption levels have surged, climbing from 82 per cent in 2019 to an impressive 93 per cent in 2023. Industry players have enjoyed substantial revenue growth, with a projected 32 per cent CAGR expected during FY24–26.

Maulesh Desai, Director at CareEdge Ratings, emphasizes need for sustainability measures, urging option of renewable energy and low-carbon technologies. entry of new players with diverse expertise is anticipated, potentially disrupting dominance of top 5 players. Moreover, India's transition to a developed market economy, coupled with rapid digitization propelled by e-commerce and emerging technologies, promises furr sectoral growth.

Desai anticipates a rise in edge data centres, particularly to cater to burgeoning demand from tier II and tier III cities. This expansion aims to ensure lower latency and bolster digital infrastructure nationwide, aligning with India's digital transformation goals.