Data Centers, Energy, and the Emerging Market Equation: A Sustainability Challenge

As emerging markets undergo digital transformation, data centers have become a critical infrastructure for enabling cloud services, AI, and digital inclusion. However, these facilities are heavy consumers of electricity and water. According to the global energy authorities, data centers and data networks account for 2 to 3 percent of global electricity demand. This energy usage is expected to rise with the increasing usage of AI and digital services expansion.

Key countries contributing to this growth are India, Brazil, and Indonesia. These markets are experiencing rapid growth in demand for digital services but at the same time face structural challenges in power generation, grid resilience, and sustainability governance. The question is no longer whether emerging markets will become global digital hubs, but whether they can do so in a sustainable manner. This blog explores the scale of the challenge, the implications for energy and climate and how academic centers such as Cornell’s Emerging Markets Institute (EMI) can assist in promoting more sustainable development.

The energy burden of digital growth

India: Rapid growth on a coal-heavy grid

India’s data center capacity is expected to increase nearly ninefold by 2030 (from 1.3 gigawatts in 2024 to more than 10 gigawatts), driven by the increase in internet usage and the expansion of AI infrastructure. At the moment, data centers consume about 0.5 percent of the country’s total electricity, and projections suggest that this percentage will reach 3 percent by the end of the decade.

However, India’s grid is coal-powered, which releases greenhouse gases and other pollutants that contaminate air and water and contribute to climate change. Urban centers like Mumbai, Chennai, and Hyderabad are points of interest for data center development, but their grids are under great pressure from the digital loads.

Brazil: Renewable potential amidst social gaps

Brazil’s data center industry has expanded rapidly with most facilities located around urban hubs like Sao Paulo and Rio de Janeiro. It has a mix of renewable energy sources, and hydropower supplies more than 80 percent of its electricity. However, the system is vulnerable to climate change—specifically drought—which can reduce hydroelectric power generation and increase dependency on fossil fuels.

Despite Brazil having a clean energy profile, social inequalities remain, as more than 1.3 million people lack reliable electricity, and many rural homes are challenged by energy poverty. This highlights the concerns about the social inclusivity of energy-heavy digital infrastructure, especially in areas with limited grid access.

Indonesia: Digital demand meets carbon dependence

Indonesia is emerging as a regional leader in the digital infrastructure space. Its data center power market is projected to grow more than 16 percent annually through the end of 2030. Locations such as Jakarta and Batam Island are popular due to tax incentives and fast-growing digital economy. The problem lies in the fact that 60 percent of the energy is generated from coal, while renewable energy sources provide only 13 percent of it. As more facilities are added to the grid, the country risks locking in carbon-heavy growth unless new energy policies speed up access to geothermal, solar, and wind power.

Sustainability pressures: Energy, emissions, and equity

The intersection of data infrastructure and energy demand introduces complex sustainability challenges across three primary dimensions:

1. Electricity consumption: Data centers operate continuously and require extensive cooling, making them among the most energy-intensive building types.
2. Water usage: In areas with limited water, cooling systems can increase water scarcity.
3. Carbon emissions: In grids that depend on fossil fuels, data centers play a major role in indirect emissions.
   These challenges are further exacerbated by the concentration of digital infrastructure in cities. While cities might offer better fiber connectivity and logistics, they often lack the renewable energy needed for sustainable growth.

Solutions in emerging markets

Innovative sustainability strategies are developing across emerging economies.

Renewable integration and power purchase agreements

India’s regulatory framework allows large consumers to purchase electricity directly from renewable energy producers. Several developers are also establishing dedicated solar and wind farms to power their facilities. In Brazil, similar long-term agreements support the use of wind energy in cloud infrastructure. Indonesia is introducing policies to let private users access off-site renewable energy through the national grid.

Cooling efficiency and AI optimization

Data centers are now leveraging advanced cooling methods such as AI-based thermal management, liquid immersion cooling, and airflow containment. Through these methods, the total facility power usage can be reduced by 15 to 30 percent. In global case studies, machine learning tools have reduced cooling-related electricity consumption by as much as 40 percent.

Policy and regulatory leadership

Governments are beginning to lead the way toward sustainability through policies. India’s data center policy offers incentives to develop green-certified infrastructure. Indonesia is aligning data center growth with clean energy goals, and Brazil is considering policies for grid assessments and local benefits for large data center projects.

The strategic role of academic research

Academic centers such as EMI can play a pivotal role in ensuring that the development of data infrastructure in emerging economies is both inclusive and environmentally responsible. They serve four key functions:

1. Research and analysis: Producing evidence-based assessments of energy, climate, and infrastructure trends to guide policymaking and industry strategy.
2. Policy advocacy: Advising governments and regulators and developing frameworks that promote sustainable energy sourcing and transparent environmental reporting.
3. Human capital development: Training professionals and public leaders in managing the transition to low-carbon, tech-driven economies.
4. Cross-sector collaboration: Connecting industry, academia, civil society, and government to align public and private efforts toward shared goals.

Looking to the future: Balancing risk and potential

India, Brazil, and Indonesia are now the leading countries on the global shifts of data centers as digital infrastructure hubs. This offers great potential for economic growth and technological progress but also brings risks like carbon lock-in, energy inequality, and unsustainable urbanization.

These risks can be reduced. With proactive policymaking, clean energy investments, and leadership from centers like EMI, data center growth can drive climate-smart development. The challenge is urgent, but the potential for lasting positive impact is just as great.

About the author

Filippos Veizades Stavrou is earning a master’s in management at the Samuel Curtis Johnson Graduate School of Management and is an EMI fellow. Born and raised in Greece, he holds a bachelor’s degree in economics and has worked in market research and business services, including financial and credit risk analysis. These experiences, along with his academic exposure at Cornell and his involvement at EMI, have shaped his passion for driving high-impact initiatives that align economic opportunity with environmental responsibility through strategic transformation in the private sector. His academic focus includes corporate strategy, sustainable development, and the dynamics of emerging markets.

All views expressed in articles published on the Emerging Markets Institute webpage are those of the author(s) and should not be taken as reflecting the views of the Emerging Markets Institute.