Gujarat has introduced a mandatory renewable power requirement for eligible AI data centre projects under its new Viksit Gujarat Data Centre Policy 2026-29, making it the first Indian state to set a specific renewable energy sourcing threshold for data centres.
Notified on August 7, the policy aims to establish 7.5 GW of hyperscale “Green AI” data centre capacity by 2029, with the Dholera Special Investment Region (SIR) positioned as a key hub for large-scale green AI infrastructure.
Under the policy, eligible data centre projects must source at least 51% of their operational electricity consumption from renewable and green energy sources. The requirement is linked directly to eligibility for the incentives offered under the policy, rather than being a voluntary sustainability measure.
Gujarat is positioning itself as a suitable location for AI and cloud infrastructure by leveraging its existing power capacity, renewable energy ecosystem, optical fibre connectivity and the financial infrastructure of GIFT City. The state has nearly 74 GW of installed power capacity and is also home to major renewable energy developments, including the Khavda renewable energy park.
The policy provides several incentives for eligible data centre investments, including power tariff subsidies, capital grants and tax exemptions. Depending on the project and investment criteria, incentives can cover up to 75% of eligible investment.
Several states, including Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh, West Bengal, Haryana and Odisha, have introduced policies to attract data centre investments. These policies have largely focused on incentives such as stamp duty exemptions, development charge waivers and power subsidies.
While some states have encouraged data centre developers to use renewable or alternative energy, Gujarat’s policy goes further by establishing a specific 51% renewable sourcing requirement as an eligibility condition.
The move comes as India’s electricity demand is expected to rise significantly, driven partly by expanding digital infrastructure and AI applications. Electricity consumption is forecast to increase from around 1,418 TWh in 2025 to 1,945 TWh by 2030.
For data centre developers, the new requirement means renewable power procurement will need to be incorporated into project planning from the beginning. Developers may increasingly look toward solar, wind and round-the-clock renewable power arrangements to meet their electricity requirements.
The policy could also create additional demand for renewable energy projects in Gujarat, providing solar and wind developers with opportunities to supply power to large AI and data centre facilities.
With global technology companies facing increasing pressure to reduce emissions, Gujarat’s renewable sourcing mandate could help the state attract hyperscale data centre investments while strengthening demand for clean power infrastructure.
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