Data centre boom sparks power and operational risks

New Delhi: India's data centre industry is expanding rapidly as demand for artifi-cial intelligence (AI), cloud computing and digital services grows, but the sector faces increasing risks related to power availability, cyber se-curity and infrastructure resilience, according to a report released on Tuesday.

According to a report by insurance broker Aon, India's installed data centre capacity could increase more than fourfold by 2030 with sig-nificant new capacity already under development. It also said that power availability is emerging as a key factor determining where new facilities can be built and how quickly projects can become operation-al.

Rising AI workloads are increasing energy consumption and putting greater pressure on electricity infrastructure. To address grid constraints and connection delays, developers are in-creasingly considering alternative energy solutions such as on-site power generation, battery storage and hybrid energy systems, said Su-shant Sarin, Managing Director & Head of Commercial Risk Solutions, India, Aon.

While these measures can improve resilience, they also introduce op-erational, maintenance and fire-related risks, Sarin added. The compa-ny cited research indicating global data centre power demand could rise by 165 per cent by 2030. Aon also said AI-led growth is changing the physical risk profile of data centres by increasing power density and cooling requirements. Water availability is becoming a growing concern, particularly in water-stressed regions, making site selection more complex.

Alongside phys-ical risks, cyber threats are becoming more closely linked to data cen-tre operations. Moreover, modern facilities rely on interconnected control systems, digital monitoring tools and third-party vendors, meaning cyber inci-dents could disrupt operations, damage assets and lead to prolonged business interruptions.

Aon said insurers are increasingly adopting a lifecycle approach to as-sessing data centre risks, evaluating factors from design and construc-tion to power resilience, cyber exposure and long-term operations.

Reflecting continued insurer interest in the sector, Aon said capacity under its Data Center Lifecycle Insurance Program has increased from $3.5 billion to $5 billion. The company said integrating risk planning, including assessments of power, water, climate and cyber exposure, will be critical as data centres become central to India's digital and AI ambitions.

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