India’s data centre push: Why Tata Power is allocating 62% capex to grid transformation 

“Due to the rapid growth of data centres, advanced economies saw a resurgence in electricity demand growth for the first time in nearly a decade,” said Tata Group chairman N. Chandrasekaran in Tata Power’s FY26 Integrated Annual Report.

He noted that advanced economies have already witnessed a resurgence in electricity demand due to the rapid growth of data centres and large-scale deployment of AI and machine learning models. India is likely to see a similar trend as the economy continues to expand and digital infrastructure scales up. 

“Peak power demand is already at record highs, and rising AI use along with a warmer climate will require clean, green, and secure sources of energy,” Tata Power noted in its report. 

Data centres to become a major power consumer

According to Tata Power’s management, the growth of AI-driven data centres will require significant investments in generation capacity, transmission networks, storage infrastructure and grid modernisation.

CEO and Managing Director Praveer Sinha said data centres in India are projected to grow around 30 per cent year-on-year in 2026. He added that the sector would need a combination of renewable energy, battery storage, pumped hydro storage and grid expansion to ensure reliable power supply.

“These capacities will be critical for a stable grid that can support the rapid scaling of AI data centres in the country,” Sinha said.

The company also highlighted that increasing decentralised renewable capacity on the grid makes energy storage essential. The Government of India estimates energy storage requirements of 410 GWh by FY32, with pumped storage projects accounting for around 42 per cent of the total requirement.

Building round-the-clock clean energy solutions

To meet future demand, Tata Power is expanding its clean energy and storage portfolio.

The company has started work on the 1,000 MW Bhivpuri Pumped Storage Project in Maharashtra and is developing additional hydro and pumped storage projects in India and Bhutan.

Tata Power said its clean and green portfolio has reached 17.5 GW, including projects under development. The portfolio spans solar, wind, hybrid and firm-dispatchable renewable energy (FDRE) projects, hydro assets and pumped storage facilities.

The company commissioned 2,452 MW of capacity during FY26 and added 968 MW of renewable energy capacity during the year.

Energy security to remain top priority 

The company believes energy security will remain a key priority amid geopolitical uncertainty and supply-chain disruptions.

Over the last five years, Tata Power has invested around Rs 33,000 crore in clean and green energy projects, accounting for 62 per cent of its total capital expenditure during the period.

“We are uniquely positioned to lead the transformation of the energy sector, balancing growth, sustainability and energy security,” Chandrasekaran said.

Tata Power expects India’s annual electricity consumption to increase by more than 570 TWh over the next five years, driven by economic growth, electrification, AI adoption and rising digital infrastructure demand.

Tata Power FY26 highlights

In its FY26, Tata Power reported a 7% year-on-year(YoY) rise in profit after tax (PAT) before exceptional items to Rs 5,212 crore, while EBITDA increased 11% to Rs 16,090 crore. Revenue for the year stood at Rs 63,681 crore. 

Tata Power added 968 MW of renewable energy capacity during FY26 and commissioned a total of 2,452 MW of projects, including third-party installations. The company also secured around 800 MW of new renewable energy projects during the year.

The company now has 16,716 MW of operational generation capacity, of which 7,856 MW is from clean and green sources. Renewable and clean energy account for 47% of its operational portfolio.

Over the last five years, Tata Power has invested around Rs 33,000 crore in clean and green energy solutions, representing 62% of its overall capital expenditure.