India's Data Centre Boom Raises Power, Cybersecurity and Infrastructure Risks: Report

Insurance broker Aon said India's installed data centre capacity could more than quadruple by 2030, with substantial new capacity already under development.

The report identified access to reliable power as an increasingly important factor in determining where new data centres can be established and how quickly projects can become operational.

The rapid growth of AI workloads is also driving up electricity consumption, placing additional pressure on existing power infrastructure.

Sushant Sarin, Managing Director and Head of Commercial Risk Solutions, India, at Aon, said developers were increasingly exploring alternative energy solutions such as on-site power generation, battery storage and hybrid energy systems to address grid constraints and delays in obtaining connections.

While these measures can improve the resilience of data centre facilities, Sarin said they also create additional operational, maintenance and fire-related risks.

Aon cited research suggesting that global electricity demand from data centres could increase by 165 per cent by 2030, reflecting the growing energy requirements of AI and other high-computing applications.

The report also highlighted how the rise of AI is changing the physical risk profile of data centres. Higher power density is increasing cooling requirements, while access to water is emerging as another concern, particularly for facilities located in regions already facing water stress.

These factors are making site selection increasingly complex, with developers having to consider not only access to electricity and connectivity but also long-term water availability and climate-related risks.

At the same time, cybersecurity threats are becoming increasingly intertwined with the physical operation of data centres.

Modern facilities depend on interconnected control systems, digital monitoring platforms and networks of third-party vendors. A cyber incident affecting these systems could potentially disrupt operations, damage physical assets and result in prolonged business interruptions.

Aon said insurers were increasingly adopting a lifecycle-based approach to assessing data centre risks. This involves evaluating potential exposures across the entire development cycle, from design and construction to power resilience, cybersecurity and long-term operations.

The growing focus on risk management comes as insurers continue to expand their capacity for the data centre sector. Aon said the capacity available under its Data Center Lifecycle Insurance Program had increased from $3.5 billion to $5 billion.

The report said integrating risk planning into data centre development would become increasingly important as the industry expands. Assessments covering power availability, water resources, climate exposure and cybersecurity will be critical as data centres become a larger part of India's digital infrastructure and AI ecosystem.