Chennai’s data centre capacity to double by 2026
January 13, 2025 / By Aryan Govindakrishnan
Chennai’s coastal location significantly enhances its appeal as a data centre hub. As a landing point for multiple submarine cable systems, the city boasts excellent international and domestic connectivity that ensures fast communication. This is critical for modern data-driven industries such as cloud computing, Artificial Intelligence (AI), and digital media streaming. These features make Chennai an ideal choice for hyperscalers aiming to establish or expand their operations in India.
Robust infrastructure and power availability
The city’s ready-to-move facilities and the presence of seasoned data centre operators make it a preferred destination for Cloud Service Providers (CSPs). As of June 2024, Chennai’s data centre operational capacity stood at 108MW. During the first half of 2024, Chennai added 19.9 MW of supply, much of which was quickly absorbed by hyperscalers. Additionally, ongoing projects are expected to add 2.6 million square feet of capacity (134 MW) by 2026, with another 2.5 million square feet (130 MW) planned for 2027–2028.
Power availability is another crucial factor contributing to Chennai’s growing reputation. The city benefits from a reliable power supply and Tamil Nadu’s commitment to renewable energy, positioning it as a sustainable and dependable location for data centre operations. These factors not only support operational efficiency but also align with global sustainability goals, which are increasingly important investment criteria.
Increasing demand and market trends
Chennai’s data centre market is thriving, driven by growing digital adoption and the proliferation of cloud services. In the first half of 2024, the city witnessed a net absorption of 16.7 MW, primarily driven by CSPs and increased commitments from the banking, financial services and insurance (BFSI) sector. This demand highlights the city’s ability to cater to a diverse range of clients, from enterprises to hyperscalers.
The market trends reflect Chennai’s preparedness for the future. Advanced facilities compatible with AI-driven workloads are gaining traction, indicating a shift towards high-performance computing. All leading data centre operators have established their footprint by acquiring land for future growth or setting up greenfield facilities to attract hyperscale cloud service providers.
Competitive cost structure
Chennai’s status as the world’s third most affordable location for data centre construction makes it highly attractive for establishing data centres and submarine cable landing points. The city offers significant financial benefits due to reduced land acquisition and building expenses, along with a readily available workforce skilled in data centre operations. These factors make Chennai an optimal choice for developing large-scale, high-capacity data centre facilities that can efficiently connect to submarine cable landing stations. This enhances its appeal to major tech companies and CSPs looking to expand their infrastructure in the region.
Future outlook
The future of Chennai’s data centre market looks promising. With the ongoing digital transformation in India, the city is set to play a central role in meeting the increasing demand for data storage and processing. As hyperscalers and enterprises seek scalable and sustainable solutions, Chennai is poised to remain at the forefront of India’s data centre revolution.
For investors seeking a strategic, cost-effective, and future-ready location, Chennai presents a golden opportunity. Its combination of robust infrastructure, excellent connectivity, and growth potential firmly establishes it as a prime location for data centre investments.
