India's data centre expansion is creating concentrated risks across power, construction, water, cyber and operations, according to a new research report by the global insurance broker Howden.
The new 25-page “Insuring the Data Centre Supercycle” report published by Howden, in September 2026 reveals that the power consumed by data centres has risen 68-fold since 2016 at a 60% CAGR as per the recent S&P data.
The demand is forecast to reach 57TWh by 2030, while expansion at live sites is increasing construction and business interruption risk.
Further, more than 90% of India's data centres have redundant capacity, yet non-damage outages and interconnected tenants continue to create insurance gaps.
Howden’s analysis identifies power infrastructure as the biggest risk factor. The challenge is not just generation capacity but reliable grid connectivity, substation capacity and redundancy at each location.
The report found that between 2016 and 2025, the power consumed by data centres built in India grew 68-fold. Increasingly, hyperscale campuses are looking to on-site, behind-the-meter generation to ensure a reliable supply. This changes the underwriting risk profile and increases the importance of location-specific power resilience assessments.
Reliable, efficient supply is a commercial priority and energy accounts for about 65% of operating costs. Power resilience is especially crucial in these markets.
Construction at live sites raises business interruption risk
India added 7m square feet of data centre space in 2025, with construction volumes growing at a 37% CAGR since 2016, the S&P data indicates. The average size of a new facility rose from 59,000sq.ft. in 2016 to 276,000sq.ft. in 2025, concentrating greater asset values at individual sites.
Between 2026 and 2030, planned expansion at existing data centres is equivalent to 78% of their current footprint. Construction alongside sensitive, high-value operations increases the risk of physical damage and business interruption, particularly during testing and commissioning. Construction and operational risks therefore need to be assessed within a single programme.
Redundancy does not remove outage and cyber risk
More than 90% of Indian data centres have redundancy built into their UPS, generator and cooling systems. However, outages still occur, often because of system failures that cause no physical damage and may not trigger traditional insurance. The market is developing solutions such as parametric cover, particularly for retail and wholesale providers.
These facilities also face the greatest systemic cyber exposure. A single compromise can affect the systems and workloads of hundreds of thousands of tenant organisations, while interconnected tenants increase the risk of lateral movement. Cyber risk therefore needs to be considered alongside property, power and operational exposures.
Water and Environment risks
Most data centres are located in urban centres where water availability is already under pressure. Cooling a 1 MW facility can require around 25.5 million litres of water annually. Water use, renewable power sourcing, energy efficiency, power usage effectiveness (PUE) and carbon footprint should form part of early site planning and risk assessment, rather than being addressed after construction.
Howden India CEO Amit Agarwal said, “Power reliability, construction at operating sites, cyber concentration and water stress can all affect uptime. These risks need to be identified early and managed together, with insurance designed around the exposures that remain. This will help operators protect their assets and avoid gaps in cover as the sector expands."