Sustainability has become a central theme in the data centre sector as operators expand capacity while deepening their renewable energy commitments. The session “Focus on Sustainability – Towards Green Power” at tele.net’s recent conference on “Data Centres in India” saw industry leaders discuss evolving approaches to renewable energy sourcing, long-term contracting, policy clarity and operational challenges. Key takeaways from the discussion…

Sustainability has become a defining pillar of India’s fast growing data centre ecosystem. Over the past few years, the conversation has expanded far beyond standalone green power procurement to a ­broader evaluation of long-term decarbonisation pathways, energy-cost management, and the overall environmental, social and governance (ESG) footprint. Operators increasingly recognise that green power sourcing is no longer a peripheral initiative but a central determ­inant of operational viability, customer preference and long-term competitiveness.

The industry’s renewable energy journey is unfolding against the backdrop of surging data consumption, rapid capacity addition across established and emerging locations, and new complexities associated with varying load patterns. As the ecosystem deepens, companies are not only aligning their sustainability strategies with hyperscaler expectations but also responding to growing interest from enterprise clients that view ­renewable energy adoption as a core indicator of environmental responsibility. The sector’s priorities have also been reshaped by the emergence of new policy instruments, battery energy storage systems (BESSs) and interstate settlement frameworks, all of which are gradually influencing procurement behaviour and investment decisions.

At the same time, the sector continues to face policy unpredictability, time-of-day (ToD) tariff changes, uneven open access regimes and a developer landscape that has undergone significant consolidation. These factors reinforce the need for stable frameworks, reliable partners and long-term contracting models capable of supporting multi-location build-outs over a 25-year project horizon. Within this envir­onment, data centre operators and renewable suppliers are increasingly viewing their engagements not as transactional power arrangements but as strategic, multi year partnerships that must withstand shifting regulations, growth uncertainties and evolving technology costs.

Sustainability priorities

Industry perspectives indicate that sustainability in data centres has reached a far more mature stage than five years ago. Earlier conversations were largely limited to reducing operational emissions through green power. Today, operators are embracing a broader ESG approach, recognising that renewable energy usage is just one part of a wider framework encompassing compliance, transparency, life cycle efficiency and resilience.

Green power, however, remains a critical lever. With power accounting for around 50-60 per cent of the data centre opex, renewable energy procurement significantly influences cost structures while simultan­eously lowering emissions. As data centre footprints expand, especially through large-scale partnerships and hyperscaler-linked capacity, securing adequate renewable supply becomes essential not only for meeting internal ESG commitments but also for supporting customer sustainability targets.

Another noteworthy shift is the rising prominence of storage and hybrid models. The evolution from stand-alone solar or wind procurement to hybrid, co-located and storage-integrated configurations reflects a maturing understanding of generation intermittency, demand curves and pricing. Industry assessments suggest that achieving fully green operations remains technically challenging; however, hybrid plus storage models are already capable of supplying around 90-96 per cent green energy at costs in the range of approximately Rs 5-Rs 6 per unit. With battery prices steadily declining, these economics are expected to improve further, making near-round-the-clock green power increasingly feasible.

Evolving energy mix strategies

Data centre operators are now adopting a more diversified approach to renewable sourcing. The journey that began with simple solar or wind procurement has progressed to hybrid set-ups and is advancing towards more sophisticated models involving BESSs. These systems offer flexibility in addressing peak load requirements, ToD imbalances and intermittency issues, enabling more predictable, reliable and optimised consumption.

The emergence of viable storage capacity has opened up more options for operators, including placing batteries at the generation end, using them as captive assets or even integrating them within facility-level infrastructure to eventually replace or complement diesel generator sets and tertiary backup systems. As solutioning becomes more complex, operators are increasingly evaluating multiple supply models and expecting developers to provide tailored configurations aligned with project timelines, expected utilisation ramps and long-term energy strategies.

Operational complexities and geographic footprint

India’s data centre landscape is no longer confined to traditional hubs. Operators now manage facilities across dozens of cities, from major metros to remote areas such as the Northeast and Jammu and Kashmir. Ensuring renewable supply across such geographically dispersed sites introduces challenges related to transmission capacity, state-level open access frameworks, land availability and scheduling.

While recent government measures, including green energy open access and enabling frameworks for BESSs, have eased some constraints, policy unpredictability continues to create operational friction. For instance, revised ToD windows in certain states have introduced uncertainty regarding cost optimisation strategies for upcoming projects. Such tariff alterations can delay commercial sign-offs and force operators to reassess sourcing strategies.

As a result, many companies are increasingly shifting preference from state-level procurement models to interstate transmission system-based sourcing, enabling more consistent planning and reduced exposure to fragmented state-wise policy actions. This approach also helps operators consoli­date power procurement across enterprise, hyperscale and tower portfolios.

Changing customer expectations

Sustainability expectations from customers have undergone a marked transformation. Hyperscalers, in particular, now treat renewable energy sourcing as a core evalu­ation criterion when selecting data centre partners. These customers prefer upfront visibility on green power arrangements and increasingly incorporate renewable-­related commitments directly into contracts. Their motivations extend beyond cost optimisation to include alignment with global net zero or carbon-neutrality goals.

Enterprise clients, especially banks and large service sector companies, have also demonstrated growing interest. For them, the sustainability narrative often outweighs the opex-related benefits of green power. These organisations frequently seek an­nual updates on renewable energy utilisation, emissions avoided and progress against sustainability benchmarks, reinforcing the need for transparent reporting and structured power procurement strategies.

This shift has prompted data centre operators to secure long-term renewable energy supply earlier in the project cycle. Having clarity on renewable allocation and utilisation enables smoother project planning, reduces contracting barriers and offers developers the confidence to build larger capacities aligned with anticipated demand.

Policy ambiguity and long-term regulatory assurance

A recurring concern across the sector is the lack of policy uniformity and long-term regulatory predictability. While power is a concurrent subject, governed by both the centre and the states, this dual framework often results in significant variations in open access procedures, charges, exemption structures and banking rules.

Industry perspectives highlight that although states offer incentives, open access can still be inconsistent, creating challenges for multistate operators. Long-term power purchase agreements, typically extending up to 25 years, require regulatory clarity to maintain cost stability and mitigate unforeseen tariff shocks. Policies that change every three to five years complicate project planning for both consumers and developers.

Industry stakeholders emphasise the need for frameworks that offer clarity on critical considerations such as tariff applicability, banking rules, waiver periods and grandfathering provisions. With renewable energy project life cycles extending over decades, certainty over these parameters is essential for lowering risk and encouraging long-term investment. Given this landscape, many operators and developers increasingly rely on central-level regulatory structures, which are perceived as more stable and predictable compared to state regimes. A more harmonised approach could significantly enhance the ease of doing business for large-scale data centre and renewable energy players.

India’s data centre sector is entering a new phase of sustainability maturity. While green power adoption has expanded rapidly, the next leap will depend on how effectively the ecosystem navigates policy clarity, storage economics, long-term partnerships and multilocation deployment strategies. As technology costs continue to evolve and regulatory mechanisms strengthen, the sector is set to accelerate its transition towards a more resilient, efficient and green digital infrastructure landscape.