New Delhi: India’s rapid push to become a global hub for artificial intelligence (AI) and cloud infrastructure could face an unexpected challenge from
climate change. Despite its massive investments in data centres, the country is facing a threat to the long-term reliability of these data centres due to rising temperatures and extreme weather, a new study has said.
The result is given in India, where billions of dollars are invested in AI, cloud computing and digital infrastructure initiatives. Climate risk consultancy Cross Dependency Initiative (XDI) states that physical climate risks, including extreme heat, electricity and damage to supporting infrastructure, are growing on par with electricity and water consumption concerns.
India’s planned data centres face growing climate risks
The report, 2026 Global Analysis of Planned Data Centres for Physical Climate Risk and Resilience, analysed 2,595 planned data centres around the world to assess their exposure to climate-related risks. The study assessed the impact of direct physical damage, operational disruptions caused by extreme heat, and failures in surrounding infrastructure such as electricity, transport and water networks.
India is ranked as the 11th country in the world to face high climate risks to planned data centres, according to XDI. The report also revealed that certain states in India are among the 30 most climate-exposed when it comes to operational disruptions due to rising temperatures, such as Tamil Nadu, Telangana and Karnataka.
Extreme heat emerges as the biggest concern
One of the biggest challenges for future data centre operations identified in the study is extreme heat. High temperatures do not cause specific damage to buildings like floods or storms, but they can cause buildings to operate at less than optimal efficiency, cause buildings to require more cooling, strain electric lines and supply, and cause electricity service failures.
Over 75% of planned data centres in India, Brazil, Mexico, Indonesia and Spain are in the high-risk category for heat-induced operational disruption, XDI said. Such risks are likely to increase with continued climate warming in the high emissions scenarios.
“Much of the debate has focused on energy demand and water consumption. But physical climate risk is becoming an increasingly important consideration in its own right,” said Dr Karl Mallon, founder and head of science and technology at XDI. Whether digital infrastructure can stay up and running, economically viable and insurable over its life cycle is the question now, he added.
Risks go beyond the data centre itself
However, even with well-designed data centres, they still rely on outside infrastructure, the report says. During events related to climate change, the electricity network, telecommunications systems, transport connections, water supply and supply chains can fail, despite the data centre’s being unharmed.
According to XDI, productivity losses associated with these indirect failures of infrastructure may be as much as ten times greater than productivity losses from direct physical damage, in line with separate models produced by the European community.
Opportunity to build more resilient infrastructure
The results come as governments and tech giants invest heavily in AI infrastructure globally. Meanwhile, insurers are focusing on climate risks more. Insurance premiums associated with global data centre infrastructure (DCI) could reach $24.2bn by 2030, up from $10.6bn now, said Swiss Re.
Despite the growing risks, XDI said the outlook is not fixed. The consultancy considers planned projects to be a chance to enhance resilience by making more effective choices when siting projects, ensuring better engineering and investment in climate adaptation.
“Future risk is not fixed,” Mallon said. “Unlike existing infrastructure, planned data centres create a window of opportunity. Decisions made today about site selection, engineering standards and resilience investment may materially influence future performance, insurability and operational continuity.”
The report emphasises the need for India to invest in digital infrastructure that is resilient to a future with more extreme weather and yet is capable of meeting the country’s long-term technology goals, as states vie for investments in AI and data centres.
