AI boom's hidden cost: Expert warns India of looming water and energy crisis

By A Representative 

As India celebrates the success of the AI Impact Summit 2026, a prominent policy voice is sounding the alarm over what he calls a dangerous gap in the national conversation: the enormous water and energy burden that artificial intelligence infrastructure will place on an already resource-stressed nation.

Shankar Sharma, Power and Climate Policy Analyst based in Sagara, Karnataka, has written to Union Jal Shakti Minister C R Patil — with copies to the Prime Minister and the Vice Chairman of NITI Aayog — urging urgent policy intervention on the water and energy demands of AI and data centres.

While the AI Impact Summit 2026 drew global attention and attracted major investment commitments, Sharma argues that the word "impact" was never truly examined. "The enormous potential associated with AI-driven scenarios — such as economic growth, job opportunities, and FDI — were all well received and reported," he writes. "It is not known whether the real impacts on the larger society in the form of escalating demand on energy and water, and the associated climate change impacts, were also deliberated on, and whether suitable remedies were discussed."

Staggering Numbers

Sharma draws on data from the International Energy Agency (IEA) and the Environmental and Energy Study Institute (EESI) to paint a sobering picture. Global data centre electricity consumption currently stands at around 415 terawatt hours annually — approximately 1.5% of global electricity use — and is growing at 12% per year. By 2030, global data centre electricity demand is projected to reach 945 TWh, nearly 3% of global supply.

The water toll is equally striking. AI-focused data centres are projected to consume 1.2 trillion litres of water annually by 2030. A single 100 MW facility can consume roughly 800,000 litres of water per day. "Large data centres can consume up to 5 million gallons per day," Sharma notes — "equivalent to the water use of a town populated by 10,000 to 50,000 people."

He also flags that in 2023, Google's global data centres consumed 6.1 billion gallons of water, a 17% increase over the prior year — often in drought-prone areas. Two-thirds of new data centres built in the US since 2022 are located in water-stressed regions, a trend Sharma warns India must not replicate.

Closer to home, Sharma points to Bengaluru's rapidly expanding data centre ecosystem as a cautionary tale. The city, already grappling with severe water stress, is seeing its crisis deepened by the very digital infrastructure meant to power India's future.

"Our country cannot afford to ignore the consequences of such a scenario on our communities, which are already witnessing the ever-escalating stress on natural resources," Sharma writes. "Two of the most impacted sectors of our economy will be water and energy."

Policy Failures Highlighted

Sharma is sharply critical of India's recently circulated draft National Electricity Policy 2026, calling it a missed opportunity. "Whereas the recently circulated draft National Electricity Policy 2026 should have adequately deliberated on these associated issues, sadly, there is a clear absence of the same," he writes.

He also laments the broader absence of a coherent national energy policy, arguing that the Ministries of Power, New and Renewable Energy, and Environment, Forests and Climate Change, along with NITI Aayog, have "not deemed it necessary to provide adequate focus on these issues of critical importance to our nation's future."

Rather than simply raising alarms, Sharma lays out a concrete set of recommendations. He calls for the retirement of old, water-intensive coal and nuclear power plants, with their land and freed-up water resources redirected toward data centre use. He also calls for a clear policy decision against building additional coal and nuclear capacity.

In their place, Sharma advocates for a massive scale-up of distributed renewable energy. He points out that India's solar potential alone is staggering: two solar technologies — agri-PV and rooftop solar — could together contribute approximately 5,200 GW of power capacity, against India's current total installed capacity of just 505 GW.

"Even if we can effectively harness only about 1% of the annual solar energy potential, it will be equivalent to about 25 times the present annual electricity generation in the country," he argues. "It should be seen as a critical issue to be deliberated on seriously, as to why our country should not aim to meet almost all of its annual electricity demand mostly through solar power technology."

On Water, Industry Offers Hope — If Policy Acts

Sharma also highlights promising technological solutions already being deployed in the industry. He quotes one data centre operator: "Shifting from water-cooled to air-cooled chillers is only about a 2–3% difference in operational cost, but it gives long-term sustainability benefits. Roughly 0.4 million litres of water are saved per day."

He further points to zero-water data centre designs using closed-loop air-cooled systems that eliminate evaporative cooling towers entirely — a model he urges policymakers to mandate for new facilities.

Additionally, Sharma recommends steering new data centres away from water-stressed Class A and B cities and drier states like Gujarat and Rajasthan, and suggests that India's renewed focus on utilising its share of Indus waters could guide the geographic placement of future data infrastructure.

Sharma closes with a direct appeal to Minister Patil, asking him to use the influence of the Jal Shakti Ministry to push the Union government toward action. "In view of the fact that our country is already stressed with the availability of freshwater for human consumption, and that the competing demand for the same from other sectors is ever increasing, there is a critical need for our policymakers to diligently consider all these associated issues — not only from the perspective of the critical sectors of water and energy, but also from a holistic perspective of the true health of our natural resources, and in the context of growing concerns due to the escalating phenomenon of climate change," he writes.

His letter was accompanied by three discussion papers on the energy-water nexus, a systemic approach to climate change, and a holistic approach to biodiversity and human welfare.

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Shankar Sharma is a Power and Climate Policy Analyst based in Sagara, Karnataka