The Indian data centre market has been abuzz with activity, especially after the onset of the Covid-19 pandemic. The fledgling market has opened up a plethora of opportunities for industry stakeholders including data centre developers, energy management companies, and software and solution providers. At tele.net’s recent virtual conference on “Data Centres in India”, representatives from Web Werks Data Centres, SunSource Energy and ESDS Software Solutions shared their views on the emerging opportunities in the market, sustainability initiatives, key challenges and the way forward. Key highlights of the discussion…
Evolving trends in the market
There are three-four micro trends that are emerging as a society. First, there is virtualisation of data and the move towards cloud infrastructure. That means data centres are required. The second is the government’s push for data localisation. Third is the push towards environmental protection, so that the load on the environment is minimised. This is where green energy comes in.
We have to understand the growth catalyst for this industry in the past three years. It is basically driven by a few factors and adoptions that have happened across the industry. One concerns the consumer’s point of view – internet penetration. From 2014 till date, internet penetration or GB per year per subscriber has grown over 40 times. It used to be 2-3 GB in 2014 and now it is more than 150 GB. Over the past three years, we have also seen cloud adoption increase.
People are also moving from on-premises data centres to outsourcing to data centre providers. The other catalyst to the data centre trend is the localisation policy, which is a push from the government, along with data digitisation initiatives. This has also triggered a huge wave of data consumption and a corresponding requirement for data centres in India.
Over the next few years, data centres are expected to witness a compound annual growth rate of between 14 and 20 per cent. Co-location investment is going to grow by 3-5 per cent in India. As far as the revenue part is concerned, pure co-location hosting will grow from $700 million-$800 million to $1.5 billion by 2025. Those are the emerging trends in the segment.
One of the key trends is probably green energy. The tonnes of carbon emitted in MW levels from data centres is actually becoming a concern for the data centre industry, the government and for environmental bodies. Therefore, data centres are now moving towards solar and renewable power.
The data centre evolution is going to be enormous, and unbelievable growth is expected to happen in this space. By 2032-33 the consumption of data centres in India will surpass power consumption of the rest of the country. So, if data centres are consuming 200 GW of power, the remaining power consumption in the country would be below 200 GW. In this scenario, we need to figure out a way for the data centre business to become independent of power discoms and be able to generate their own green power. Generating more green power is the only way we can be relevant in the future.
Today, the growth of the cloud is 44 per cent in India. From the current $5 billion market, it will reach $15 billion by 2025-26. The reason the cloud is experiencing 44 per cent growth is because of data localisation and an increase in demand for in-house data centres during the pandemic. The data centre business is also growing in double digits at 15-20 per cent. Over the next four to five years, the growth will cross 30-40 per cent. At that point, we will have to think of how to let data centres grow without hurting other business verticals of the country.
Power cost of data centres
The cost of electricity is the most major expenditure in running a data centre, and that will depend on who you are buying from and at what quantum. Typically, open access electricity comes at around Rs 3.50 per kilowatt-hour on the sellers’ part, and can be delivered at around Rs 4-Rs 4.50. Further, grid electricity can cost somewhere around Rs 5.50-Rs 6.50 per kilowatt-hour. This is the broad range of tariffs that companies are facing.
The cost is around Rs 4.50-Rs 5 per unit from the renewables perspective and anything between Rs 7 and 8 for grid power, depending upon the state. On top of it, if you partially include the DG cost, say, in Mumbai, you have very little – maybe 1 per cent – of the overall cost. In other states, where power is an issue, the cost may go up.
The power cost ranges between 25 per cent and 35 per cent. This is for a pure-play data centre company.
Power saving technologies
There is a lot happening in the energy and energy technology space. A lot of things are changing with respect to technology upstream, such as solar and renewables. While data centres have their own set of requirements in terms of redundancy and so forth, the set of options is going to increase massively in the next few years.
We are currently looking at the renewable power part. Trials are ongoing for hydrogen fuels, etc. People are experimenting in the US and in India. This can be a disruptive technology from the data centre perspective.
Submersion cooling is something that can help big time in power consumption. At least 20-25 per cent efficiency can be achieved using submersion cooling. Data centres can also be set up in the cooler areas. But the cooler areas are in very high seismic zones. For instance, you cannot establish data centres in Arunachal Pradesh, Uttarakhand or Kashmir. So, the only op-tion at the moment for power saving is submersion cooling.
Key risks and challenges
In terms of sustainability, the key risks and challenges specifically concern the environmental footprint and carbon footprint. In an industry such as data centres, it is not just buildings that have an impact, but also active components such as the huge amount of computing going on inside the buildings. Most of the load comes either from computers or from the chosen cooling method, in India. So, there is a whole lot we can do about it on the building design front and so forth.
There is also the element of sourcing energy. In India, we are used to the backup coming from diesel, because that is the most available and cost-effective solution as far as back-up is concerned. The more renewable elements data centres are able to source, the more sustainable they become. At this point, the way to increase sustainability is to build on your upfront design and then procure as much renewable power as you can.
The key challenge we are facing currently with respect to data centres concerns the build phase. Getting clearance from the government takes a lot of time, and the time-to-market is reduced. Another challenge is that of skilled manpower, which is required at the data centre. Further, in India, as of now, the demand is growing but the supply is limited. While companies are working to increase the supply, the overall ecosystem still needs to be developed.
Power is something that can become a challenge in the near future. Chip shortage is another problem. However, the problem might get sorted by 2023. But if it does not, it will become a major risk for the growth of data centres and cloud in the country.