The Andhra Pradesh government has introduced a new policy aimed at positioning the state as a national hub for data centres, granting Deemed Distribution Company (Discom) status to large-scale facilities. This reform fundamentally changes how these power-intensive units source and manage electricity, recognizing them as mission-critical infrastructure with massive, continuous, and quality-sensitive power needs, often running into several hundred megawatts within a confined project area.
Key Features of the Policy
The government noted that the scale and reliability required by data centres go far beyond conventional high-tension consumer arrangements, necessitating a dedicated power distribution framework. However, the state will grant the deemed discom licence only to large strategic data centre projects with a minimum connected load of 300 MW. Developers can also aggregate loads from multiple locations within the state to meet this threshold.
With discom status, data centres can develop, own, operate, and maintain their own internal power distribution systems within a notified project boundary. This area will be treated as a designated supply zone, and power distribution will be restricted strictly to the data centre's own operations, with no supply to outside consumers.
Flexibility in Power Sourcing
A key highlight of the policy is complete flexibility in power sourcing. Data centres can procure electricity from any lawful source, including renewable energy generators, captive plants, power exchanges, or bilateral power purchase agreements. They can also establish solar, wind, or hybrid systems with battery storage to meet their needs, according to special chief secretary (energy) and special CS to CM, K Vijayanand. However, developers will be responsible for securing transmission connectivity and bearing all associated charges. They must also function as scheduled entities under grid operations, complying with load dispatch protocols and deviation settlement mechanisms.
Mandatory Green Energy Push
The policy mandates that at least 51% of total energy consumption must come from renewable sources. This can be achieved through direct procurement, captive generation, or green certification mechanisms, aligning the sector with sustainability goals.
Infrastructure and Compliance Norms
Data centre operators will have to build interconnection infrastructure at their own cost and adhere to stringent technical standards related to grid connectivity, safety, metering, and system operations. They must maintain high reliability standards, follow grid discipline, and submit periodic performance reports to regulators.
Safeguards for Existing Discoms
The government has ensured that the new framework does not impact existing discoms. The policy applies only to new greenfield data centres, preventing migration of current consumers and avoiding revenue loss or stranded assets. At the same time, data centres can opt for standby power from discoms under separate agreements. In case a data centre exits operations, a structured handover mechanism has been put in place to ensure continuity of supply.
Strategic Push for Digital Economy
Backed by abundant renewable energy potential, strong transmission networks, port connectivity, and cable landing infrastructure, the government believes this reform will significantly boost investor confidence. The move is expected to attract hyperscale data centre investments, create jobs, and accelerate the state's emergence as a digital economy powerhouse.
