High-tech firms are increasingly power-hungry, and the climate crisis is compelling them to pivot towards renewable energy sources. This shift is particularly relevant as the demand for electricity surges to fuel generative AI data centers. Globally, data centers have emerged as significant consumers of electricity, with their energy needs escalating dramatically in recent years. However, the persistent lack of clean energy remains a formidable barrier to their expansion.
In this landscape, Nepal finds itself at a unique crossroads. The country boasts surplus electricity generation capacity, primarily from hydropower, which aligns perfectly with the global demand for clean energy to power data centers. Currently, about 1.5% of global electricity is allocated to data centers and data transmission, but this figure is poised to rise dramatically. As of now, the U.S. consumes 50 MW of data center energy per million people, starkly contrasting with India’s mere 1 MW. Nepal, with its nascent data center investments, could leverage its abundant clean energy resources to attract global tech giants.
The exponential growth in power requirements for AI applications has outpaced the gains made in energy efficiency. Breakthroughs in Deep Neural Networks have enabled advancements in various fields, from image recognition to natural language processing, necessitating high computational power. This has shifted the role of data centers from mere data storage to the demanding tasks of training and running AI models. According to Bloomberg Intelligence, the electricity consumption of data centers is expected to increase four to tenfold by 2030, driven by the burgeoning generative AI sector.
Major tech companies like Google and Microsoft are already consuming electricity on par with entire countries, such as The Netherlands. Despite their net-zero commitments, these firms face significant challenges in balancing their energy consumption with sustainability goals. Consequently, they are exploring all available clean energy sources, including wind, solar, and even nuclear power, to meet their burgeoning energy needs.
This scenario presents a ripe opportunity for Nepal to position itself as a prime destination for data centers. The recent partnership between the Chaudhary Group’s BLC Holdings and India’s Yotta Data Services to establish Nepal’s first supercloud data center is a promising development. Yotta’s experience in managing large hyperscale data centers in India could catalyze further private sector investments in Nepal’s data infrastructure.
However, to truly capitalize on its potential, Nepal must overcome several hurdles. The country’s data infrastructure remains underdeveloped, and its current capacity would require substantial scaling to meet even its own needs, let alone those of the broader region. If Nepal aims to match India’s per capita IT services, it would need to establish multiple data centers, each consuming significant power. The proximity to large population centers in Northern India and Bangladesh further enhances Nepal’s strategic advantage.
Investing in fiber optic infrastructure and IT parks is crucial for attracting global players. The recent installation of NTC’s XGPON network, which offers high-speed connectivity, is a step in the right direction. However, this service is currently limited to Kathmandu and needs expansion to other urban areas.
Ultimately, the investment climate in Nepal must also evolve. Relaxing government regulations would facilitate foreign investment and enable the country to fully harness its digital infrastructure potential. As the global demand for data centers continues to rise, Nepal stands on the brink of a transformative opportunity—one that could establish it as a technology hub while providing jobs for thousands of trained IT professionals. Embracing this moment could redefine Nepal’s role in the global tech landscape, aligning economic growth with sustainable energy practices.
