India needs 20% global data centre capacity with increasing data needs, says RMZ

RMZ is deploying around $30 billion towards data centres

• India produces 20% of global data but has just 3% storage capacity.
• RMZ to invest Rs 2.8 lakh crore in data centers across 3 states
• Renewable energy is key to lowering data centre operational costs

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Real estate and alternate assets firm RMZ's chair of its supervisory board, Manoj Menda, said in an interaction with Moneycontrol that India needs signficantly higher data centre capacity, with the country generating around 20 percent of the world's data. India currently has around 1.5 GW of data centre capacity, a fraction of the global capacity.

"If India is going to generate 20 percent of the world's data, it means we need 20 percent of the world's data center capacity, which unfortunately we don't have today. We are about 3 percent versus our need of 20 percent. Today, we are at 1 gigawatt (GW), and I think we need about 8 GW in India over the next 5 years," Menda said during the interaction.

RMZ, though multiple public private partnerships with state governments such as Maharashtra, Andhra Pradesh, and Karnataka, is deploying around Rs 2.8 lakh crore towards the development of data centres in these states, over the next decade. The Bengaluru-based firm has a platform for the development of data centres with the British data services firm Colt.

He also added that concerns around the significant consumption of land, electricity, and capital that data centres consume should be linked to such facilities being enablers of jobs in the future, with data centres generally needing a skeletal staff to function on a daily basis. Menda noted that around $8 million to $10 million in investment is needed to set up 1 megawatt (MW) of data centre capacity, and around 1.5 GW of power supply is needed for a data centre capacity of 1 GW.

"I think you have to look at digital infrastructure as a critical infrastructure. It's not purely linked to job creation. If you are going to lay a fiber optic cable tomorrow, it is not going to create jobs. But a fiber optic cable is going to support our economy, which is exactly what digital infrastructure does. So, whether it is telecom towers, fiber optic cables, or data centers, these are all critical infrastructure that are needed to support the growth of any economy. This is critical to many businesses that create jobs," said Menda.

Multiple countries and other jurisdictions have imposed outright moratoriums, or are asking data co-location providers and hyperscalers to pay for their own power infrastructure and other utilities, as artificial intelligence and cloud applications consume an increasing amount of power and water through data centres for computing needs.

In multiple US states, politicians have faced backlash from domestic consumers over rising bills, which they have blamed on bulk power purchase agreements by hyperscalers and co-location players. In response, US utility providers have significantly scaled up renewable energy development, particularly solar energy, as a time and cost-efficient way to increase power supply.

Data centre developers, including in India and in the US, are also deploying renewable power for their operations, either on-site, or through the wider grid.

"We would want to keep our operational costs down. For us, ensuring that we are able to provide renewable power solutions and bring down the cost of operations is a critical aspect of data center operations. In fact, these are discussions we had with the state government when we spoke about powered lands, is to ensure that they are powered by renewable sources," said Menda.

As for the investments, Menda said that while the data centres will be developed as part of its platform with Colt, it can look at external sources of funding, from private equity or otherwise, on major projects, to take some risk off the firm's own balance sheet.