Hyderabad: The Andhra Pradesh government is set to roll out a policy that will allow private firms with more than 300 megawatt (MW) power requirement to apply for a discom licence, senior officials told ThePrint.
Once the policy is announced, Andhra Pradesh will be the first state to give discom licences to private firms outside the power industry.
IT, pharmaceutical, and steel companies in the state have been pushing for discom licences to meet their requirements for reliable and uninterrupted power, as their energy demands continue to grow.
With discom licences, private companies can directly procure electricity from power-generating firms through power purchase agreements. This will reduce their dependence on state utilities.
Large data centre players and partnerships, involving Adani and Google, Brookfield and Reliance, and Meta and Sify Technologies, will also benefit from this policy, as they expand their footprint in Andhra Pradesh.
“Given the unique power requirements of large data centres, steel plants, and other manufacturing companies that have invested in the state, our government has decided to allow private firms to apply to the Andhra Pradesh Electricity Regulatory Commission (APERC) for a discom licence,” Prudhvitej Immadi, chairman and managing director of Andhra Pradesh Eastern Power Distribution Company Limited, told ThePrint.
Moreover, Prudhviraj Immadi confirmed that private players will use the state’s grid, saying, “Private licensees will not need their own network, as of now. They will be granted open access to the AP Transmission Company (APTRANSCO) network on payment of charges.”
Licensing framework
A discom, or distribution company, is the final link in the power supply chain. Under the Electricity Act, 2003, the Ministry of Power lays down the discom licensing framework, including rules for capital adequacy, creditworthiness, and codes of conduct. The Central Electricity Regulatory Commission and State Electricity Regulatory Commissions are responsible for issuing licences under this framework.
The rules are frequently updated—most recently via the Electricity (Amendment) Bill, 2025—to reduce entry barriers, enable network sharing, and foster competition in the distribution sector.
Currently, state-owned utilities own approximately 80 percent of all discom licenses in India. In limited geographical areas, private power generators, such as Tata Power, have also been authorised for electricity distribution.
In Andhra Pradesh, power distribution is conducted by three state-owned discoms—AP Central Power Distribution Company Ltd, AP Eastern Power Distribution Company Ltd, and AP Southern Power Distribution Company Ltd.
According to officials, post-privatisation, the state commission will continue to determine the floor and ceiling tariffs for retail supply of power whenever there is more than one discom in an area.
Industry reactions
The government’s policy has received a thumbs-up from the industry, with private power-generating firms and original equipment manufacturers (OEMs) suggesting that other states follow suit.
K. Jayarama, the founder and COO of Vantageo—an OEM specialising in IT infrastructure and server solutions—told ThePrint, “The AI era has changed power consumption mechanics altogether.”
“With data centres sprouting in different parts of the country, power demand will shoot up tenfold once a data centre is operational. A competitive tariff from a power supplier will aid significantly in keeping the operational costs of a data centre in check.”
With India’s data centre economy projected to scale up to 10 gigawatts (GW) by 2030, Jayarama said power and water requirements would quadruple. A one-GW data centre needs an equal amount of power, and 1.5 times the water, which is precisely 150 billion litres.
Agreeing with Jayarama, Vikram Redlapalli, CEO of RDP India, which specialises in setting up AI Infrastructure for data centres, said that states could be more proactive in their plans to step up power generation.
Redlapalli told ThePrint, “Data centre, or AI, is the new oil. We are all stepping into the tokens or AI era, which is nothing but the era of intelligence. The foundational aspects of AI infrastructure are power. Countries that have an answer to the power generation and supply will rule the AI growth wave.”
What AI models need
The International Energy Agency, which works with governments globally to secure their energy needs, said in its report on AI energy demand that “global electricity consumption for data centres is projected to double to reach around 945 TWh by 2030”.
“From 2024 to 2030, data centre electricity consumption grew by around 15 percent per year, more than four times faster than the growth of total electricity consumption from all other sectors. The rise of AI is accelerating the deployment of high-performance accelerated servers, leading to greater power density in data centres. Understanding the pace and scale of accelerator adoption is critical, as it will be a key determinant of future electricity demand,” the report said.
To emphasise the growing need for power, Redlapalli cited Elon Musk and Microsoft exploring space and undersea data centre environments to bypass the huge power and water requirements for AI models.
“States will have to think of every aspect of the power supply chain, not just transmission. Around the world, countries are approving plans to set up captive nuclear reactors within data centre compounds to secure the required power,” he added.
Highlighting that the combined AI-related spending of Amazon, Alphabet, Meta, and Microsoft is projected to approach or exceed $700 billion in 2026, Redlapalli emphasised that India needs to scale its AI infrastructure as fast as possible.
Redlapalli, however, cautioned that power licences, like liquor licences, will have to be controlled and closely monitored.
(Edited by Madhurita Goswami)
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