Green Gigawatts : Financial Viability and Water-Constrained Siting of Renewable-Powered Data Centres in India

The diffusion of artificial intelligence has made data centres one of the fastest-growing sources of global electricity demand, and India is emerging as a major frontier of this expansion amid acute regional water stress. Prior research has examined data-centre energy economics and groundwater depletion largely in isolation; this study connects the two in a single, state-disaggregated evaluation of renewable-powered data-centre investment. Using a quantitative design implemented in Python, it integrates 25-year discounted cash-flow valuation under an explicit single-counting energy-flow specification with a monetised water-cost, climate-risk, and regulatory-risk adjustment for a representative one-gigawatt facility across five leading state hubs. Fiscal eligibility emerges as a first-order determinant of viability: where the operating entity qualifies for the cloud-services tax holiday announced in the Union Budget 2026-27, all five hubs record positive baseline net present value at the 9 per cent discount rate and three exceed the 12 per cent infrastructure hurdle rate, whereas under standard corporate taxation no state clears the hurdle rate and Delhi-NCR turns negative. Monetising water costs together with climate and regulatory risk premiums reduces baseline net present value by 11 to 47 per cent in four states, renders Delhi-NCR unviable, and reorders the viability rankings, with Karnataka overtaking Maharashtra. India can therefore build large-scale data-centre capacity that is financially viable and water-aware in selected hubs, provided fiscal incentives, siting decisions, and water-conservation mandates are jointly targeted.