BT Explainer: Will AP govt’s power distribution licence to Google Data Center impact legacy players?
In a first-of-its-kind policy, the Andhra Pradesh government has cleared a power distribution licence to the upcoming Google data centre in Visakhapatnam. It is likely to impact financially constrained power distribution companies.
- May 7, 2026,
- Updated May 7, 2026 4:15 PM IST
Google has received a power distribution license for its upcoming data centre in Visakhapatnam, making Andhra Pradesh the first state in the country to provide distribution licences to private firms outside the power sector.
In India, power distribution licenses are given to state-run distribution companies and power sector players in the private sector, such as Tata Power and Adani. Power distribution companies (discoms) are responsible for delivering power from transmission networks to end consumers.
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“It has become necessary to allow and facilitate data centres that possess the requisite expertise to obtain a distribution licence for data centre(s) already being developed or proposed to be developed in the state,’’ an order issued by the AP Energy Department said.
What does it mean for discoms?
Data Centres are power guzzlers requiring huge power for running operations. They fall under the ambit of Commercial and Industrial (C&I) customers, that constitutes for about 45% of all energy demand in the country.
Any switch of a big C&I customer, such as Google Data Centre, impacts the discoms or power distribution companies, especially state-run, that are already facing huge financial challenges.
The discoms are already seeing migration of C&I customers from grid load to open access via sourcing of energy through the renewable energy route, says Girishkumar Kadam, Senior Vice President & Group Head, Corporate Sector Ratings at ICRA.
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Migration of C&I to other alternate consumers is largely renewable from discoms, and the loss impact is getting addressed by discounts, rationalising tariffs, and passive protests by the power distribution players.
“The discoms are already offering tariff rationalisation by offering time of the day (TOD) discounts when solar energy is available. ToD discounts are one way to mitigate and retain high-paying customers. There are some discounts offered to customers,” says Kadam.
What is the order?
According to the AP government, the data centre projects undertaken by a single developer or investor with a minimum connected load of 300 MW or above within the state are eligible for a deemed distribution licence (DDL).
A single investor may aggregate connected load across multiple data centre locations within the state to meet the threshold. However, the power supply should be restricted exclusively to data centre(s) loads within the licensed area.
The DDL shall not supply power to any third-party consumer outside the licence area approved by the Andhra Pradesh Electricity Regulatory Commission (APERC) in the power procurement.
The DDL would have the freedom to procure power from any lawful source, including renewable energy generators through bilateral PPAs, open access, captive generating plants (including solar, wind, and hybrid with BESS), and power exchanges.
Google has received a power distribution license for its upcoming data centre in Visakhapatnam, making Andhra Pradesh the first state in the country to provide distribution licences to private firms outside the power sector.
In India, power distribution licenses are given to state-run distribution companies and power sector players in the private sector, such as Tata Power and Adani. Power distribution companies (discoms) are responsible for delivering power from transmission networks to end consumers.
Must read | Visakhapatnam to ‘AI-Patnam’: Google’s $15 billion blueprint for India’s AI hub
“It has become necessary to allow and facilitate data centres that possess the requisite expertise to obtain a distribution licence for data centre(s) already being developed or proposed to be developed in the state,’’ an order issued by the AP Energy Department said.
What does it mean for discoms?
Data Centres are power guzzlers requiring huge power for running operations. They fall under the ambit of Commercial and Industrial (C&I) customers, that constitutes for about 45% of all energy demand in the country.
Any switch of a big C&I customer, such as Google Data Centre, impacts the discoms or power distribution companies, especially state-run, that are already facing huge financial challenges.
The discoms are already seeing migration of C&I customers from grid load to open access via sourcing of energy through the renewable energy route, says Girishkumar Kadam, Senior Vice President & Group Head, Corporate Sector Ratings at ICRA.
Don't miss | How Chandrababu Naidu keeps winning: After Google data centres, 5th-gen fighter factory in Puttaparthi
Migration of C&I to other alternate consumers is largely renewable from discoms, and the loss impact is getting addressed by discounts, rationalising tariffs, and passive protests by the power distribution players.
“The discoms are already offering tariff rationalisation by offering time of the day (TOD) discounts when solar energy is available. ToD discounts are one way to mitigate and retain high-paying customers. There are some discounts offered to customers,” says Kadam.
What is the order?
According to the AP government, the data centre projects undertaken by a single developer or investor with a minimum connected load of 300 MW or above within the state are eligible for a deemed distribution licence (DDL).
A single investor may aggregate connected load across multiple data centre locations within the state to meet the threshold. However, the power supply should be restricted exclusively to data centre(s) loads within the licensed area.
The DDL shall not supply power to any third-party consumer outside the licence area approved by the Andhra Pradesh Electricity Regulatory Commission (APERC) in the power procurement.
The DDL would have the freedom to procure power from any lawful source, including renewable energy generators through bilateral PPAs, open access, captive generating plants (including solar, wind, and hybrid with BESS), and power exchanges.