India’s power sector saw a flurry of activity last week, from a land policy shift in Rajasthan to a battery storage pilot in Kerala, as data centres emerge as the newest source of demand on the grid, as per a JM Financial report.

Rajasthan has amended its land rules to fast-track allotment for mega renewable energy parks, even as it re-floats a thermal power tender that was scrapped just two months ago. Andhra Pradesh wants to bring down its power purchase cost by pairing solar and wind with pumped storage at over a hundred reservoirs. Furthermore, the Ministry of Power now pegs incremental demand from data centres at 26.3 GW across 11 states, a number that will only grow as more projects come up. 

How are utilities bracing for the data centre boom? Let’s find out:

India’s power demand rises 14% as data centres add to grid load 

Average daily energy demand during the week stood at 5,523 million units, up 14% from a year earlier, the brokerage said. Peak solar demand touched a record 258 GW, 17% higher than last year, while peak non-solar demand came in at 248 GW, up 10%. The grid managed the load reasonably well. The maximum deficit was zero during solar hours and 1,280 MW during non-solar hours, as per the JMFL report. 

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Behind this rising demand is a familiar driver: the Ministry of Power expects 26.3 GW of additional power demand from data centres across 11 major states, the report noted. Of this, applications for grid connectivity have already been filed for about 17 GW, while requests for the remaining 9.3 GW are yet to be submitted.

Rajasthan, Andhra Pradesh and Kerala push renewable power and energy storage 

Rajasthan has amended its land allotment rules to make it easier for developers to secure land for renewable energy parks of 1,000 MW and above, as well as green hydrogen projects, even before grid connectivity is in place. The state had earlier set aside around five lakh acres of government land, enough for 100 to 125 GW of solar capacity.

Andhra Pradesh‘s chief minister has asked officials to draw up plans to expand power generation, including pumped storage projects at 130 reservoirs and better integration of solar, wind and pumped storage. The state is targeting an average power purchase cost of Rs 4.6 a unit in 2026, falling to Rs 4 a unit by 2029.

Kerala, meanwhile, is testing a smaller, community-level model. The state plans a battery energy storage pilot in Kollam district that will give four-hour backup to 200 households with rooftop solar connections, with the state electricity board handling grid integration, smart metering and settlement.

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Elsewhere, Rajasthan has re-floated a 3,200 MW tender for a greenfield thermal power project. The tender was first issued in December 2024, extended multiple times, and eventually scrapped in June this year after regulators and climate activists questioned whether it was needed.

Reliance plans coal gasification project as nuclear stocks face short-seller bets 

Reliance Industries has proposed India’s first integrated underground coal gasification complex, to be set up in Andhra Pradesh at an investment of Rs 2.73 lakh crore spread over 30 years, according to the report.

On the other side of the ledger, the report cited a Financial Times estimate that short sellers made about $2.1 billion betting against small modular nuclear reactor stocks, including NuScale Power, Oklo and Nano Nuclear Energy, as the hype around the sector cooled.

Also during the week, India’s installed solar open access capacity grew by 3 GW in the April to June quarter, taking the total to 36 GW. Karnataka leads with a 21% share, followed by Rajasthan and Maharashtra at 16% each.

Battery and pumped storage emerge as key priorities for India’s renewable power growth 

Speaking on the sidelines, Santosh Kumar Sarangi, secretary at the Ministry of New and Renewable Energy, flagged storage, comprising battery energy storage systems and pumped storage projects, as an area set for major growth, alongside rooftop solar and farm-based solarisation. He also pointed to the need for stronger domestic manufacturing across the solar and wind value chains.

India’s power sector is caught in a tug-of-war right now. On one side, demand is surging, with data centres and industry pulling more power than ever. On the other, states are still scrambling to figure out how to pay for renewable capacity and get storage built fast enough to keep up. The outcome hinges on unresolved details: Rajasthan’s land allotments, Andhra Pradesh’s fight to cut power purchase costs.