India's data centre boom raises power, cyber and infrastructure risks: Report

New Delhi, OctOBER 6 (IANS): India's data centre industry is expanding rapidly as demand for artificial intelligence (AI), cloud computing and digital services grows, but the sector faces increasing risks related to power availability, cyber security 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 significant 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 operational.

Rising AI workloads are increasing energy consumption and putting greater pressure on electricity infrastructure.

To address grid constraints and connection delays, developers are increasingly considering alternative energy solutions such as on-site power generation, battery storage and hybrid energy systems, said Sushant Sarin, Managing Director & Head of Commercial Risk Solutions, India, Aon.

While these measures can improve resilience, they also introduce operational, maintenance and fire-related risks, Sarin added.

The company 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 physical risks, cyber threats are becoming more closely linked to data centre operations.

Moreover, modern facilities rely on interconnected control systems, digital monitoring tools and third-party vendors, meaning cyber incidents could disrupt operations, damage assets and lead to prolonged business interruptions.

Aon said insurers are increasingly adopting a lifecycle approach to assessing data centre risks, evaluating factors from design and construction 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.