Daybreak - Google is now Andhra Pradesh's first private electricity company. You'll be paying for that

Episode Date: June 4, 2026

Andhra Pradesh wants to be India's data centre capital. Google, Meta, and Reliance have all been promised space in Vizag. To make it work, the state did something it has never done before — handed Google its own electricity licence, letting it bypass the state grid entirely.The logic is straightforward. The consequences are not. When large consumers leave the grid, electricity gets more expensive for everyone else. Farmers lose subsidies. Factories pay more. Coal plants stay open longer than planned.And somewhere in Vizag, a data centre is being built 120 metres from the city's drinking water reservoir.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Some of India's biggest states are in the middle of an AI data center race. Currently, the country's total existing capacity for data centers sits at about 1.3 gigawatts, which is spread across Mumbai, Hyderabad, Chennai and Bangalore. Now, Andhra Pradesh wants to enter the fray, leading with ambitions of increasing that same capacity almost sixfold. The state has promised Google, Meta, Reliance, TCS and more companies, a combined 5 gigawatts of capacity. And the first of these centres to come up is Google's,

in Vishaka Putnam or Rizag. Part of this plan involved doing something that's never been done in the state before, which is giving Google a discom license that happened this April and made it the first private company to ever have that privilege in the state. Now, before we go further,

let me explain what a disccom license is first. You see, discoms or distribution companies distribute electricity. They basically take care of the last mile delivery by buying powers from generators and delivering it to consumers. They are usually state-owned and they usually do the things that are like handling bills, complaints and keeping the lights on. Now, what the Google Disccom license does is give it the power to skip the state distributor and procure deals directly with power generators.

Considering data centers made consistent power 24-7, this would be a pretty lucrative deal for these electricity providers. But that also takes Google out of the state grid. And when a large electricity consumer like that leaves, that same electricity becomes more expensive for everyone else. To explain how exactly that happens, I have with me in the studio my colleague and Ken reporter Renmay Culkerni. Now, Miramai has spent days on the ground reporting in Vishaka-Patnam on the effect that the upcoming data centers are going to have on the electric grid over there. And if you've been keeping track of how data center projects across the world are faring, you must have heard about all the cancelled projects in the US and Europe due to civilian protests.

That same civilian protest is also happening in WISG. I also spoke to V.S. Krishna, an activist and president of the human rights. Rights Forum, a group that has been speaking out about what the project is costing the land and the people around it. You will be hearing from him in this episode as well. Let's get into it. So, Muramai, thank you so much for joining us on daybreak yet again. Always lovely to have you. So my first question to you is Google is getting this discom license, right? And it's kind of literally becoming its own electricity company, especially in Andhra Pradesh. So how did this happen? And why was this a necessary move for both Google to make and for Andhra to kind of let them make?

Hi, it's really, really lovely being back here. I think this is the fourth time or so. I'm on daybreak. Please keep calling me. It's fun. About Google, the issue with the whole data center's projects coming up in WISAC was that Andhra Pradesh is not exactly in a position to provide electricity for the projects because I think Google's power requirement itself is like 2.1 gigawatts of electricity.

And Andhra Pradesh's projected estimates of the electricity requirement it would have is slightly less than that one. So rather than risk losing a data center project because of the power requirement, they came up with a solution where they said that we would give data centers something called a deemed distribution license. Right. Essentially, this means that it would allow companies, data centers, to procure power directly from generators and use it for their own data centers. Unlike a traditional discoms, they don't really have the license to distribute it to other entities and make money of that. But Raidane Infotech, which is Google subsidiary, has received this discom license from it. Okay.

Basically, they will be using the state's own transmission network for their data centers, but. they would be sourcing their power from generators and renewable sources everywhere. I see. But this is also a bad thing, right? Because once Google kind of leaves the state electricity grid, it kind of can partner with any of these power generators and become their priority consumer. And that changes things up because this is a subsidy-based system, right? Exactly. So basically what Andhra Pradesh and what most states have in India is that agricultural electricity consumers get a subsidy. So power tariff structures have something called a cross subsidy.

Which means that if you are using renewable energy and you are sort of not using power from generators, you pay a surcharge tax so that the discount can actually fund the subsidies that's giving to the agricultural population. except that right now when Google is exiting the discount system it stops contributing to the cross-subsidy pool right now the situation is that there are solar plants in a state there are thermal power plants

there are a bunch of people generating electricity the discom buys it at a specific price because it has to keep the industrial tariffs at a reasonable level so that industries feel okay about operating over there and it has to provide subsidies to maybe consumers in villages, agricultural consumers, things like that. Everything works at a set price right now.

If you give a license to an external entity, like a data center, and you don't put up guardrails like some amount of electricity has to be supplied to the government, what electricity generators are going to do is supply electricity to Google instead of supplying it to a discount. Which will obviously give like a very competitive price. Which means whenever discoms have to buy electricity, they would have to buy it at a higher price. Right. And when they are supplying it to consumers,

they would either have to increase the industrial tariffs or they would have to lower the agricultural subsidy. Now, lowering agricultural subsidy is a politically pretty sensitive thing in India because that's what you win in actions on, which is why the move they'd likely go with is increasing industrial tariffs. And with agricultural subsidies, this does not cover, like, people like us who live in like apartment complexes, the kind of electricity that's provided to them? So we are kind of somewhere in the middle of industrial tariffs and agricultural subsidies. So if industrial

tariffs go up, definitely the costs of consumer electricity, like, you know, domestic consumption, would also go up. And like, do you have an idea on what kind of rate that would be or? No, because this is like pretty futuristic and it's going to happen in like 2030. They haven't released numbers yet, which again, I think is a little bit part of the problem. because you are putting out a policy, but you're not putting out any projections of what do you expect a lag in revenue, how are you going to make up for it, what rates are you going to apply? So I do think this lack of mathematical modelling is also a problem in this case.

And the DM distribution license, like this was like an official policy change that they made so that Google could get this license. Yes, it's not just for Google, actually. The Arir Pradesh government said very, very clearly that we are applying this to any data. centers which are coming in our state. So META and SIFI are also opening a data center over there. I'm sure there would be a bunch of projects too. In WISAC and Vichak-Patnamune.

In Vizag, yes. And I'm sure there would be a bunch of projects too because land is extremely cheap. So this is a policy they came up with specifically for data centers. I see. And now that Google has got this discOM license, presumably Meta and Sipi would also want to follow that part. Yeah, I mean, if Google is kind of setting a precedent over here and if they show that this something that can work.

You've got to understand that for Google, something working basically means that their data centers get power 24-7. It's not particularly concerned with what the impacts on the rest of the state would be, whether the industrial tariffs would go up or the agricultural subsidies would go down. It is a private entity. So, META or other companies applying for licenses would also sort of view it in the same manner that, okay, these are companies which are getting power 24-7, and that's something we would also want.

And this means that the state would have to go to generators who are less reliable, less, more expensive. I think they would actually, this is my opinion, I do feel that they would fall back on coal a lot more. Ah, okay. And is coal more expensive to generate it now? Not really, no, but it is not environmentally friendly. Like, obviously, if you are trying to achieve renewable energy target,

and like I said in Mumbai, if we had to keep our coal plants open just to supply, electricity to the rest of the state, it's not particularly a good look for a renewable energy targets. What I can tell you is that Mumbai has a lot of data centers. There were a few coal plants that were actually scheduled to be shut down because, you know, we are trying to transition to renewable energy. And those coal plants had to postpone their shutdown because they had to provide power to the data centers.

So no matter how much the mandate goes, data centers are going to rely on renewable energy most of the time, we are kind of going to have to rely on thermal power again. Especially, as you said, that if Google has a discom license, a lot of the renewable energy suppliers are going to prefer selling their energy to Google and to other data centers because discoms aren't really famous for, you know, paying people on time. Yeah.

So that's going to be a problem, I fear. So once like, you know, meta-reliance, T-C, years, these kind of companies also get the same Disccom license, which is most likely to happen, right? What happens when they all start going off the state grid? We haven't actually had a comparable situation in India before where a bunch of companies have come to a state, not used electricity from the state and actually sourced electricity from other people around it. So it would be interesting to see it, to say the least.

Like I said, it would definitely affect electricity tariffs everywhere. And since agricultural subsidy is a little too political of a thing to touch, I think it would raise tariffs for other industries. Especially because the Disccom license policy, which Andra has right now, is just for data centers. So it's not like maybe a car factory or some or a semiconductor factory can actually approve, sorry, apply for a Disccom license. So I think industrial tariffs over there would definitely go up. I see, and that would mean what?

I mean, depends on, like, if this is the only state doing it or if other states are also choosing to model on the same account. But if industrial electricity costs more in a state, obviously industries would choose to move elsewhere or choose to expand, you know, in other states. Got it. And Andhra, I'm guessing, does have, like, a lot of industrial. Andra does actually have, like, a lot of industrial.

So, especially because Chandra Prabhu, Nidu is, incredibly optimistic about the state and he is definitely planning a quantum city over there. He's planning a MetTech zone over there. It would be interesting to see how one policy can affect all your other industrial future aspirations. Right. Especially because those future aspirations also include more data centers, right? And like I already brought up in the intro, I spoke to VAS Krishna, an activist and president of human rights forum who told me that Google has plans for multiple campuses. Reliance also has a proposal

and the state itself has an ambition of getting to 6 to 6.5 gigawats of data center capacity. One gigawada, one gigawad at Rambilli, 500 megawatt at Andhavaram, which is like 2.5, right? 2.5 gigawatt.

And Reliance's proposal is for 1.5, which is like 4 gigawatt already. and then, and then, Lokesh wants the other two gigawatts also. We'll have like 6 to 6.5 gigawatt. Can cumulatively Visha Kapitnam take this load? So the lokesh that Krishna referred to right now is Nara Lokesh, who is the IT minister for the state.

And turns out, the answer to Krishna's last question, which is can Visha Kapatenam take this load, is that it would find it really tough to do so, which is something Murnay has actually reported on a couple months ago, even before Google received this license. So, Miranai, you also covered this in a story before where you also went to Vishaka-Parnam, right? And you covered exactly this question on ground about how the grid isn't exactly ready to deal

with this kind of infrastructure. Could you explain a little bit about what that is? So the issue with data centers, unlike maybe a factory for making cars, is that they're They do need power 24-7 because that's how long the servers would be running. And they need a lot of power. Obviously, like I mentioned before, the state cannot possibly provide all of this on its own. Most of the renewable energy projects in Andhra Pradesh, which is kind of what data centers are heavily relying on, are located on the western side.

And WISAG is obviously on the eastern coast. So the state was building something called green transmission. lines. It was a project to ensure that green energy was supplied from one end of the state to another. And a bunch of states were actually building that one. Andra is one of the states which has actually missed its target for 2026. So it's kind of delayed on that one as well. When I went to WISAC, I did see the site for Google's data center. It's really beautiful hills and now it's kind of turning into a flat land basically. But I didn't really see a lot of planning about, you know, setting up new power stations, ensuring that, you know, the nearby areas wouldn't be affected.

What about the farms there? What about the other factories there? So, and I spoke to a couple of farmers who live there and they said that every time there is a new industrial project in the area, our electricity goes up and down. So there is a direct impact happening. It's just, there isn't a lot of planning. The deem distribution license does actually seem like a fair bit of planning from the state. But it's also a little like offloading your problem to the private entity and hoping it solves itself. You know, this wave of data centers coming up in India is kind of coinciding with like a lot of protests and stuff that are happening in the West where data center projects are getting cancelled because of like public outcry and protest. Right. So and some of it has to do with the environmental damage, the noise pollution, light pollution, etc.

but also about like how electricity costs have been going up a lot and also becoming more unreliable like you mentioned the farmers also saw like an up and down in the supply so so like a data center coming up in here in Weisak and also with Google getting getting the disccom license is that is that something we're going to see over here as well like a almost like a copy paste kind of thing or are there going to be differences to be honest when I was just reporting on the story, I did feel that the public sentiment in the West, especially in Europe and in UK, where Open AI did cancel one of its data centers right before I wrote the story. Public sentiment over there is a lot more, you know, it's protesting, people are protesting a lot more. Yeah.

And governments are really listening to them and canceling projects because, you know, it is polluting the land nearby. there is no electricity to be supplied to them. In India, I think most states right now, especially, because in India, when you open something in one state, it does become a little bit of a competition with other states. We've always seen it between Bangalore and Hyderabad. I think data centers are kind of following a similar pattern where Mumbai has so many.

So how much does Andra have? How much does Bangalore have? How much does anything else have? And I think we state governments are kind of focusing on acquiring data centers and making our states AI ready and tech forward and bright and shiny and new. And there isn't enough outcry against them. Right. And when there is, it's not, I don't see it very widely reported, to be honest.

That's true. There is outcry. There is outcry, yes. And the weird part is generally when a new industry comes to a state, the government sells it to the people by saying this is going to generate so many jobs for you. Right. As we have seen in most countries, data centers don't actually generate a lot of jobs for people. So one of the reasons why, like, there has been public outcry in WISAC is because of what you mentioned about how the hill, like the beautiful hills over there being flattened.

And that has also kind of, it's kind of being censored as we speak. Like, at least that's what some organizations and like think tanks who've been reporting about this have been saying, especially on Instagram and Facebook. So why do you think that has been the case, especially for this particular data center? Okay, so I actually found this very interesting. The Adavi Varam site is actually very close to the, I'm sorry about my pronunciation, but it's close to the Kamal Kondha Wildlife Sanctuary. And it's a notified eco-sensitive zone. They started clearing the land and flattening it way before they got an environmental clearance.

and this is actually it's a it's not just it's not just important for the wildlife over there there there are people whose livelihoods over there are being affected because they live in such close proximity to the forest and it's it's weird in India where you know you did at the very least how to get an environment clearance before you started a project somewhere and when the environment collective reported on this obviously the government was unhappy with it and they were they moved to take down the video from Instagram, from Twitter. And this is not the first time I'm seeing it happen. I mean, just two days ago, I read this story about how the government in Maharashtra has approved a mining site to come up in a coal mining site to come up in Garci Roli, which is again politically and ecologically very sensitive zone.

And they've done it without getting an environment clearance. So I think we, I mean, in a rush to industrialize when. not actually doing it very sustainably. And we're not letting people speak about it either. That would be their own version of censorship, yes. Yeah. Actually, also apart from just the censorship, when I spoke to Krishna, he alleged that the way the things and procedures

that have begun on the policy end has actually been very non-transparent, especially considering that this project is not defensive in nature. it doesn't really warrant the confidentiality or secrecy that, you know, RTI attempts have been met with. So, and also there is this thing called the Environmental Impact Assessment or EIA, which is basically a tool that the government uses to identify the environmental, social, and economic impacts of a project before any kind of decision-making goes through. And now, as Krishna explained to me, under the EIA, projects are classified. classified under categories A and B, where category A requires a more rigorous process for a go-ahead,

including clearance from the Ministry of Environment and Forests, which is on behalf of the central government. And category B, on the other hand, requires clearance only at the state level. Now, Krishna believes that the data centers were classified wrongly, and that the environmental clearance was also given faster than usual. They very clever classified the projects in category B instead of category A. Understand that if it is placed as it ought to be properly in category A, it would require a MOEF clearance. The whole MOEF thing comes into play.

You will have to prepare an environmental impact assessment report, translate into local language, get available to the people, have your mandatory public hearing. In other words, transfer it. wanted to have MOE. Environment Impact Assessment Report. What is known as a EIA report, right? And then have a public hearing. They just placed it in category B, analyzed it like if we're a shopping mall or something,

did some copy paste kind of thing, and got the state environment impact assessment authority, S-E-I-O-A, at the state level to rubber stamp it and get an environmental care. They applied for Environment E-E-C. on April 9th. And the EC was ready by April 18th. All done in CEQ, you apply for the death certificate

or some mini certificate in the Mandar Revenue office and it'll take you a couple of weeks, right? How can a big project like this be assessed, appraised and the EC granted in nine days? What's also of concern to other civilians from the area is this. One side of the centre is set to be really close to a reservoir

that supplies drinking water to Vishakaputnam. It's just 120 meters away from a drinking water reservoir. Murasulawa reservoir is a picnic spot since I was a kid. This proposed size is going to sit on the catchment, southern catchment of the reservoir. The Murosurlauva Reservoir provides drinking water to Vishaka Putnam. How can you have a construction on the catchment of a reservoir at a distance of 120 meters from the reservoir in itsel? and not just any construction but a data center.

And considering data centers are famous for using up water and for ruining its quality, this kind of outrage makes sense. And honestly, it's still kind of mind-boggling to me that you're making a policy that would make things harder for you in the long run. I think you're making a policy that would invite data centers to come and set up in your state. Okay.

And like you're not actually. considering how it would impact other things. Like you're sort of going with a wheel, we'll fix it as we go mechanism. Daybreak is produced from the newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription offers daily long-form feature stories, newsletters and a whole bunch of premium podcasts.

To subscribe, head to the Ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague Rachel Vargis and edited by Rajiv Sien.