India’s Artificial Intelligence Data Centres Plan May Hit ‘Heat’ Hurdle

As India races to attract billions of dollars in investment for artificial intelligence, cloud computing, and digital infrastructure, a new global assessment warns that the country’s next generation of data centres may be increasingly exposed to climate-related disruptions.

A report released on Wednesday by climate risk consultancy XDI (Cross Dependency Initiative) finds that while attention has largely focused on the energy and water demands of data centres, physical climate risks – from extreme heat to infrastructure damage caused by severe weather – are emerging as a critical challenge for the sector.

The report, 2026 Global Analysis of Planned Data Centres for Physical Climate Risk and Resilience, analysed 2,595 planned data centres worldwide to assess their exposure to direct climate damage, operational disruptions linked to extreme heat, and risks arising from failures in surrounding infrastructure such as power, water and transport networks.

For India, the findings raise fresh questions about the long-term resilience of the country’s rapidly expanding digital infrastructure ecosystem.

Also read: AI Could Soon Use More Water Than Humanity Drinks, UN Warns

India ranks 11th globally in terms of the concentration of climate risks facing planned data centres, according to the analysis. More strikingly, several of India’s key technology and investment hubs – Tamil Nadu, Telangana and Karnataka – feature among the top 30 sub-national regions worldwide facing the highest modelled operational disruption risk from extreme heat.

The warning comes as India positions itself as a major destination for data centre investments, driven by surging demand for AI computing, cloud services and data localisation requirements.

“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.

“The question is no longer simply where the next generation of digital infrastructure gets built, but whether those assets can remain operational, insurable and economically resilient over their intended life,” he added.

The report highlights a broader global trend. South Asia, Southeast Asia and East Asia currently have the highest proportions of planned data centres exposed to high climate risk. In South Asia, 12% of planned facilities are already classified as high risk under current conditions, with risks projected to more than triple by the end of the century under a high-emissions scenario.

Heat appears to be one of the biggest concerns.

Also read: Water Use By AI Data Centres May Equal Needs Of 1.3 Billion People By 2030: UN Report

Countries including India, Brazil, Mexico, Indonesia and Spain record some of the highest projected operational disruption risks linked to extreme temperatures. According to XDI, more than 75% of planned facilities assessed in these countries fall into the high-risk category for heat-related disruptions, with risks expected to escalate further as global temperatures rise.

Unlike floods or storms that can physically damage infrastructure, prolonged extreme heat can reduce equipment efficiency, increase cooling costs, strain electricity supplies and raise the risk of service interruptions.

The report also argues that climate vulnerability extends beyond the data centre campus itself.

A facility may be engineered to withstand extreme weather. Still, it remains dependent on external infrastructure- including electricity grids, telecommunications systems, transport networks, water supply and supply chains- that can fail during climate-related events.

XDI cites separate European modelling showing that when these indirect risks are included, productivity losses can be ten times higher than estimates based solely on direct physical damage.

The findings arrive amid an unprecedented global buildout of AI infrastructure. As companies and governments pour billions into computing capacity, insurers are also beginning to scrutinise climate exposure more closely. Swiss Re estimates that global insurance premiums linked to data centre infrastructure could rise from $10.6 billion today to $24.2 billion by 2030.

Yet the report stresses that the risks are not inevitable.

“Future risk is not fixed,” said Mallon.

“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.”

For India, where states are aggressively competing to attract data centre investments and AI-related industries, the findings underscore a growing challenge: ensuring that the infrastructure powering the digital economy is built not just for demand growth but also for a hotter, more climate-disrupted future.