Google is now Andhra Pradesh's first private electricity company. You'll be paying for that

**Rachel Varghese** (0:01)
Some of India's biggest states are in the middle of an AI data center race. Currently, the country's total existing capacity for data centers sits at about 1.3 gigawatts, which is spread across Mumbai, Hyderabad, Chennai and Bangalore. Now, Andhra Pradesh wants to enter the fray, leading with ambitions of increasing that same capacity almost six-fold. The state has promised Google, Meta, Reliance, ECS and more companies a combined 5 gigawatts of capacity. And the first of these centers to come up is Google's, in Vishakhapatnam or Vizag. Part of this plan involved doing something that's never been done in the state before, which is giving Google a DISCOM license. That happened this April and made it the first private company to ever have that privilege in the state. Now, before we go further, let me explain what a DISCOM license is first. You see, DISCOMs or distribution companies distribute electricity. They basically take care of the last mile delivery by buying powers from generators and delivering it to consumers. They are usually state owned and they usually do the things that are like handling bills, complaints and keeping the lights on. Now, what the Google DISCOM license does is, give it the power to skip the state distributor and secure deals directly with power generators. Considering data centers need consistent power 24x7, this would be a pretty lucrative deal for these electricity providers. But that also takes Google out of the state grid. And when a large electricity consumer like that leaves, that same electricity becomes more expensive for everyone else.
To explain how exactly that happens, I have with me in the studio, my colleague and Ken reporter, Ranmai Kulkarni. Now, Ranmai has spent days on the ground reporting in Vishakhapatnam on the effect that the upcoming data centers are going to have on the electric grid over there. And if you've been keeping track of how data center projects across the world are fairing, you must have heard about all the cancelled projects in the US and Europe due to civilian protests.
That same civilian protest is also happening in Vizag. I also spoke to VS. Krishna, an activist and president of the Human Rights Forum, a group that has been speaking out about what the project is costing the land and the people around it. You'll be hearing from him in this episode as well. Let's get into it.
So, Mrunmay, thank you so much for joining us on Daybreak yet again. Always lovely to have you.
So, my first question to you is, Google is getting this DISCOM license, right? And it's kind of literally becoming its own electricity company, especially in Andhra Pradesh. So, how did this happen? And why was this a necessary move for both Google to make and for Andhra to kind of let them make?

**Mrunmayee Kulkarni** (3:21)
Hi, it's really, really lovely being back here. I think this is the fourth time or so I'm on Daybreak. Please keep calling me. It's fun.
About Google, the issue with the whole data center projects coming up in Vizag was that Andhra Pradesh is not exactly in a position to provide electricity for the projects because I think Google's power requirement itself is like 2.1 gigawatts of electricity, and Andhra Pradesh's projected estimates of the electricity requirement it would have is slightly less than that one. So rather than risk losing a data center project because of the power requirement, they came up with a solution where they said that we would give data centers something called a deemed distribution license. Essentially, this means that it would allow companies' data centers to procure power directly from generators and use it for their own data centers. Unlike a traditional DISCOMs, they don't really have the license to distribute it to other entities and make money of that, but Raidan InfoTech, which is Google's subsidiary, has received this DISCOM license from it.
Basically, they will be using the state's own transmission network for their data centers, but they would be sourcing their power from generators and renewable sources everywhere.

**Rachel Varghese** (4:43)
I see. But this is also a bad thing, because once Google leaves the state electricity grid, it can partner with any of these power generators and become their priority consumer.
And that changes things up because this is a subsidy-based system, right?

**Mrunmayee Kulkarni** (5:07)
Exactly. So basically, what Andhra Pradesh and what most states have in India is that agricultural electricity consumers get a subsidy. So power tariff structures have something called a cross-subsidy, which means that if you are using renewable energy and you are sort of not using power from generators, you have to pay a surcharge tax so that the DISCOM can actually fund the subsidies it's giving to the agricultural population. Except that right now, when Google is exiting the DISCOM system, it stops contributing to the cross-subsidy pool. Right now, the situation is that there are solar plants in the state. There are thermal power plants. There are a bunch of people generating electricity. The DISCOM buys it at a specific price because it has to keep the industrial tariffs at a reasonable level so that industries feel okay about operating over there. And it has to provide subsidies to maybe consumers in villages, agricultural consumers, things like that. Everything works at a set price right now.