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• Andhra Pradesh has introduced a policy allowing large data centres with a minimum 300 MW connected load to operate as deemed distribution licensees and procure power directly.
• The move is aimed at supporting the state's AI and data centre ambitions, particularly in Visakhapatnam, where up to 5 GW of capacity is planned, including Google's proposed 1 GW campus.
• The policy mandates 51% renewable energy sourcing while protecting the interests of existing power distribution companies.
The Andhra Pradesh government has unveiled a new power policy designed to support the development of large-scale artificial intelligence and data centre infrastructure by allowing eligible facilities to function as deemed distribution licensees (DDLs). The measure, announced in recent months, is intended to reduce power procurement costs for data centre operators while facilitating the state's broader ambition of becoming a major AI and digital infrastructure hub.
The policy is particularly significant for Visakhapatnam, where Andhra Pradesh is positioning itself as a destination for large data centre investments. The state has outlined plans to develop up to 5 GW of data centre capacity in the city and is already attracting major proposals, including Google's planned 1 GW data centre campus, one of the largest such projects announced in India.
Data centres are among the most electricity-intensive assets in the digital economy. As AI adoption expands, demand for computing capacity has increased sharply, resulting in growing requirements for reliable and affordable power. To address this challenge, Andhra Pradesh has decided to extend DDL status to private data centre developers, a provision previously used mainly for government entities, ports, airports, special economic zones and industrial enclaves.
Under the framework, data centres with a minimum connected load of 300 MW can obtain DDL status. Developers are permitted to aggregate electricity demand from multiple facilities to meet the eligibility threshold. Once approved, operators can procure electricity directly from lawful sources, including through open-access arrangements, and distribute power within their project boundaries. The arrangement exempts them from certain surcharges normally imposed on open-access consumers, potentially lowering operating costs.
The state government has argued that the approach reduces the need for local distribution companies to invest in additional generation capacity and network infrastructure solely to serve large data centre campuses. Instead, developers will be responsible for securing power connectivity, building internal distribution systems and bearing associated transmission costs approved by regulators.
The policy places several restrictions on licence holders. DDL status can only be used within the notified project area, and electricity cannot be supplied to consumers outside the designated campus. Existing commercial consumers are also barred from shifting to the scheme, protecting distribution companies from losing established high-paying customers.
Sustainability provisions have also been incorporated into the framework. Data centres receiving DDL status must source at least 51% of their electricity consumption from renewable energy sources. The requirement aligns with Andhra Pradesh's wider clean energy strategy, which aims to position the state as a major renewable energy and technology investment destination.
Industry observers view the policy as a significant regulatory intervention in India's emerging AI infrastructure sector. By linking power sector reforms with digital infrastructure development, Andhra Pradesh is seeking to address one of the most significant constraints facing large-scale data centre investments: access to affordable and dependable electricity.
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