“In the case of India, the way we model it, so our base case power demand growth if it’s 5.5% compounded annual growth rate (CAGR), this is a 0.5% bump up to that,” Nigania said, comparing the scale of the shift to the United States, where AI-driven demand has already reversed years of flat power use.
Nigania also pointed to a renewable energy tender that came in below the cost of a new thermal plant, a first for the sector. He called it a big event after discussions with market participants in Delhi last week.
India holds three advantages that could draw data center investment, Nigania said. The country has some of the cheapest solar power in the world, thermal power costs stay in line with other markets, and new high-voltage transmission lines take about three years to build compared with eight to ten years in the United States. He added that India already ranks among the largest markets for companies such as OpenAI, behind only the United States.
Nigania said the winning bid mimicked a thermal plant’s round-the-clock supply profile at ₹5.25 a unit, below the ₹5.5-6 range that new thermal capacity commands. “For a renewable plant to supply a same profile at a lower cost than thermal is what was the talk of the town when I was in Delhi last week,” he said.
He added that demand for non-solar hours will keep rising, benefiting storage technologies. “No one wants just solar. People want non-solar supply more than anything,” Nigania said.
The pricing gap between solar and non-solar hours remains wide, he said. Spot power falls to ₹1-2 a unit when the sun is out, and climbs to the government-set ceiling of ₹10 a unit once the sun sets, a level that has held through most nights over the past month.
Nigania named three ways to invest in the data center power opportunity: asset owners setting up the centers themselves, equipment suppliers such as transformer and optic fiber makers serving the wider grid buildout, and utilities that supply the power. He favours utilities with large land and transmission holdings, naming Adani Green Energy as well placed given its land bank.Nigania flagged a separate issue facing state-run lenders PFC and REC. Loan book growth has slowed to mid-single digits from the teens seen earlier, he said, with PFC’s loan book shrinking quarter-on-quarter between March and June.
Banks that once avoided the power sector are now lending to renewable projects at rates near 8%, close to home loan levels, taking business away from PFC and REC. Both companies also carry foreign exchange exposure hedged through options rather than swaps, adding to earnings pressure. Nigania rates both stocks Outperform but said a re-rating is unlikely without loan growth returning.
Across his coverage, Nigania said he favours transmission as a theme, along with coal-based generation and nuclear power over the long term. His top picks are Larsen & Toubro (L&T) for capital expenditure exposure, JSW Energy on any price correction given its thermal capacity additions, and NTPC as a value stock positioned across thermal, nuclear and renewable energy.
For the full interview, watch the accompanying video
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