India’s $80 B Coal Expansion Risks Worsening Water Crisis With Rising Data Centre Demand

India has earmarked nearly USD 80 billion for coal-fired power plants through 2031 to meet surging industrial demand—including the rapid expansion of data centres. Most of these projects are located in water-stressed regions, raising concerns that thermal power and tech infrastructure could intensify local water scarcity.

Coal Expansion in Driest Regions

Federal documents reveal 44 planned coal projects, 37 of which fall in areas already classified as water-stressed or scarce. The NTPC-operated Solapur plant, commissioned in 2017 with a capacity of 1,320 MW, exemplifies strain on local water supplies—residents there report water delivery shrinking from alternate days to just once a week .

India already lost about 60.33 billion units of coal-fired generation since 2014 due to water shortages—the equivalent of 19 days of full supply at June 2025 levels . The 2,920 MW Chandrapur Super Thermal Power Station, located in central Maharashtra, frequently shuts down multiple units during droughts and is now planning a further 800 MW expansion without securing additional water sources .

Intensifying Data Centre Pressure

India’s data centre capacity, currently around 950 MW and expected to reach 1.8 GW by 2026, is concentrated in high-growth markets such as Mumbai, Bengaluru, Hyderabad, Delhi-NCR, and Chennai . Cooling demands alone can use tens of millions of litres per MW each year—for instance, a single 1 MW facility may require up to 25 million litres annually.

These facilities predominantly rely on coal-generated electricity—over 70% nationally; in Maharashtra as much as 78%, and as much as 85–90% in Delhi NCR . Despite efforts to adopt air-cooled chillers and treated wastewater, much of the energy and water footprint remains unaddressed .

Competing Needs and Local Impacts

Expansion of thermal power and high-density data centres in water-scarce zones pits industrial growth against local communities and agriculture. In Solapur and Chandrapur, residents report halted agricultural productivity and intermittent household water supply. Coal plants typically withdraw fresh groundwater or surface water at nearly twice the global average, driven by insufficient adoption of dry-cooling systems and recycled water—only 2–5% of plants use these solutions .

Policy and Sustainability Implications

This situation underscores a critical disconnect between Site Selection—driven by land availability—and water sustainability. Political and economic incentives often overshadow environmental considerations. With India’s per-capita freshwater availability already under pressure—only 4% of global freshwater for 17% of global population—the stakes are high 

Path Forward

Balancing India’s dual goals—energy security and water sustainability—requires integrated solutions. These include prioritising renewable energy investments, deploying dry-cooling or wastewater-based systems in thermal plants, enforcing strict siting criteria, and enforcing national guidelines on water usage and environmental impact assessment. Support for sustainable data centre technologies should also be mandatory, not voluntary.

Conclusion
India’s $80 billion coal-powered capacity expansion alongside rapid data centre growth threatens to intensify water scarcity in already stressed regions. Without urgent intervention—through shifts in energy mix, water-efficient technologies, and stricter site selection—the water-energy nexus may derail both economic development and environmental balance.

Source: Outlook Business