NTT India building more data centers, renewable power plants
By Atul Ranjan
NEW DELHI, NNA - Riding on the surging wave of data consumption and internet bandwidth in India, the local unit of Japan’s NTT Ltd. will open more renewable captive power plants to serve the energy needs of its growing number of data centers in the South Asian country.
NTT India, which currently operates 10 data centers in the country, is looking to add at least four more in the next two years.
The ambitious move comes under its $1.5 billion investment plan to boost their capacity following a widespread surge in the use of smart devices, social media and digitalization, which was accelerated by pandemic lockdowns last year.
The company, which also allocated $100 million to set up renewable plants, has opened its first two of such plants since September last year.
These investments are part of NTT's $2 billion capex to ramp up India operations over the next three years.
The information technology service provider opened its second renewable plant, which is a hybrid wind-solar power facility, in the southern state of Karnataka in January. It launched its first captive solar power plant in the western state of Maharashtra last September.
Sharad Sanghi, CEO of NTT India, told NNA that the second plant is currently using only wind to generate power. It will also use solar power from next month.
The Maharashtra-based plant is aimed at meeting 83 percent of the total power needed to run its data centers in the western city of Mumbai.
The company is also planning to set up renewable power plants in the states of Tamil Nadu and Uttar Pradesh, said Sanghi.
Power resilience is essential to the smooth running of data centers which have to consume a large amount of energy.
According to a study done by local real estate services firm Anarock in collaboration with Mace, a London-based consultancy, data center operators in India, which have been buying energy from power suppliers, are now shifting from their high-polluting and expensive diesel backup generators to renewable sources to provide both normal needs and standby.
On having NTT's own captive renewable power plants, Sanghi said, "It’s reliable and cost effective as well.”
NTT India is the result of the integration of its three key Indian entities - NTT India Pvt. Ltd., NTT Communications India Pvt. Ltd. and NTT-Netmagic - in January this year to serve clients better.
The bigger entity now operates data centers across four major cities - Mumbai, Chennai, Bengaluru and Noida. It will set up four more centers in these cities in the next 18 months, said Sanghi.
India’s data center industry has been largely concentrated in these four cities, accounting for around 60 percent of the total data center sites and more than 75 percent of load capacities in the country, according to ratings agency Crisil.
It said the local market, which accounts for 1-2 percent of the global pie, was estimated to have achieved a robust compound annual growth rate (CAGR) of 15-20 percent since 2016 to hit about $1billion in 2019. It was projected to jump to $1.2 billion in 2020.
But now, the market is expected to soar even higher at a CAGR of 25-30 percent to hit $4.5-5 billion by 2025 on the back of an exponential data surge. There is also a growing need for local data storage in line with the government policy on data localization.
“The data center business has received strong tailwinds from an unlikely source – the COVID-19 pandemic,” said Crisil.
“Even as the pandemic and associated restrictions threw life and business out of gear, stalling growth in most sectors, it became a massive catalyst for digital adoption as the crisis accelerated the transition to the digital medium,” said the agency.
Crisil added that almost all aspects of daily life – be it banking, education, or shopping – have switched to the digital medium almost instantaneously, leading to a boom in India’s digital ecosystem.
As a leading data center operator in the country, NTT India is looking to cash in on the abundant opportunities.
“We are forecasting at least 20 percent CAGR for the next 2-3 years for our overall business of the new integrated unit,” Sanghi told NNA.
He said that BFSI (banking, financial services and insurance) markets, OTT (over-the-top) platforms, e-commerce, online services as well as the government’s digitalization initiatives are expected to be the key drivers.