AP unveils deemed discom policy for large data centres

Vijayawada: In a move to position Andhra Pradesh as a national hub for data centres, the state govt has unveiled a policy granting Deemed Distribution Company (Discom) status to large data centres. The reform fundamentally alters how these power-intensive facilities source and manage electricity, recognising them as "mission-critical" infrastructure with massive, continuous and quality-sensitive power needs, often running into several hundred megawatts within a confined project area.The govt noted that such scale and reliability needed to go far beyond conventional high-tension consumer arrangements, necessitating a dedicated power distribution framework. However, the state govt will grant the deemed discom licence only to large "strategic" data centre projects with a minimum connected load of 300 MW. The developers can also aggregate loads from multiple locations within the state to meet this threshold.With the discom status, the data centres can develop, own, operate and maintain their own internal power distribution systems within a notified project boundary. This area will be treated as a designated supply zone, and power distribution will be restricted strictly to the data centre's own operations, with no supply to outside consumers."A key highlight of the policy is complete flexibility in power sourcing. Data centres can procure electricity from any lawful source — including renewable energy generators, captive plants, power exchanges or bilateral power purchase agreements. They can also establish solar, wind or hybrid systems with battery storage to meet their needs," said special chief secretary (energy) and special CS to CM, K Vijayanand. However, developers will be responsible for securing transmission connectivity and bearing all associated charges. They must also function as scheduled entities under grid operations, complying with load dispatch protocols and deviation settlement mechanisms.Mandatory green energy pushThe policy mandates that at least 51% of total energy consumption must come from renewable sources. This can be achieved through direct procurement, captive generation or green certification mechanisms, aligning the sector with sustainability goals.Infrastructure and compliance normsData centre operators will have to build interconnection infrastructure at their own cost and adhere to stringent technical standards related to grid connectivity, safety, metering and system operations. They must maintain high reliability standards, follow grid discipline and submit periodic performance reports to regulators.Safeguards for existing discomsThe govt has ensured that the new framework does not impact existing discoms. The policy applies only to new greenfield data centres, preventing migration of current consumers and avoiding revenue loss or stranded assets. At the same time, data centres can opt for standby power from discoms under separate agreements. In case a data centre exits operations, a structured handover mechanism has been put in place to ensure continuity of supply.Strategic pushBacked by abundant renewable energy potential, strong transmission networks, port connectivity and cable landing infrastructure, the govt believes this reform will significantly boost investor confidence. The move is expected to attract hyperscale data centre investments, create jobs and accelerate the state's emergence as a digital economy powerhouse.