When Google becomes the grid, and the Railways cannot

In April 2026, the Andhra Pradesh government granted Google's subsidiary Raiden Infotech India Private Limited a deemed distribution licence (DDL) for its 1 GW data centre hub near Visakhapatnam. This means that Google can now procure and distribute its own electricity instead of buying it from the state utility as any other consumer does.

It is the first private firm outside the conventional power sector to hold a ‘deemed licensee status’ in the state, and the first hyperscale data centre in India to do so. 

Interestingly, in the next month, the Supreme Court denied the same to another massive power consumer —  the Indian Railways.

Both entities consume only their own electricity, but only one was handed control of its supply.

What is a deemed distribution license

A deemed distribution licence is a route under section 14 of the Electricity Act, 2003, which states: “The Appropriate Commission may, on an application made to it under section 15, grant a licence to any person (a) to transmit electricity as a transmission licensee; or (b) to distribute electricity as a distribution licensee; or (c) to undertake trading in electricity as an electricity trader, in any area as may be specified in the licence.” Section 15 of the Act details the procedure for grant of licence as: “Every application under section 14 shall be made in such form and in such manner as may be specified by the Appropriate Commission and shall be accompanied by such fee as may be prescribed.”

Google’s subsidiary, Raiden Infotech India, was granted the deemed licensee status through a separate Andhra Pradesh Energy Department order in April 2026, issued after the state cabinet had already cleared its incentive package for data centres in October 2025.  The deemed licensee itself was not named in that incentive package. It came later, through a different order. 

Unlike Military Engineer Services (MES) or a Special Economic Zone (SEZ) developer, which both hold deemed licensee status because they physically distribute power to other parties like the defence cantonment's civilian residents or the SEZ’s multiple tenants, the licence does not on its face require Google to supply third party tenants; the facility's own three campuses are both the supply area and the only consumer. 

Why the Railways could not become distributor

Back in 2015, the  Railways sought recognition as a deemed distribution licensee from the Central Electricity Regulatory Commission (CERC) to avoid cross-subsidy and additional surcharges that large-scale customers pay. CERC initially agreed, but there was pushback from multiple states on the ground that a deemed licensee has to actually distribute power to someone else. 

The Supreme Court’s May 2026 ruling held that the Railways' power network exists solely to carry electricity for its own trains, signalling and stations. Since it does not supply external consumers, it is not a power distributor. 

Google’s facility fits the same functional description — it supplies no one but itself. The difference lies in the process each followed. Railways sought recognition through litigation, asking the courts to read an existing, general provision in its favour, whereas the Andhra Pradesh government created a new category specifically for data centres over 300 MW, by executive order. 

Under this narrower definition of a deemed licensee, Google's facility does not need to supply electricity to third parties.

Lost revenue 

In May 2026, Maharashtra's electricity regulator enforced the SC’s judgment, ordering the Railways to pay ₹3,351 crore in outstanding surcharges. TheRailways' own internal estimates put its total exposure nationally at around ₹15,000 crore.

On the other hand, Andhra Pradesh's discom is projected to forgo ₹500-1000 crore annually in surcharges from Google’s facility, if it runs continuously at just the 300 MW threshold the policy sets. The actual facility is designed for up to 1 GW, more than three times that load.

Commercial and industrial users pay cross-subsidy premiums that keeps farm and household tariffs low. Data centres, which pay more per unit than most commercial users and run continuously are customers a discom cannot afford to lose. 

But Andhra Pradesh has now published a threshold and a template, which is already being followed inside the same district — Reliance's giga-scale facility at Polipalli, a short distance from Google's site, has drawn a comparable incentive package from the state. 

The state government approved over ₹19,000 crore incentive package and 855 acres of land for Reliance. The incentive includes power tariff discount of ₹1 per unit for 15 years, a 20-year exemptions on transmission, wheeling charges, electricity duty, and reimbursement of net state goods and services tax (SGST) accrued on capital investments up to 10 years. 

Uttar Pradesh's Draft Data Centre Policy contains a similar provision to extend distribution licences to qualifying projects. Each new grant narrows the base of large, reliable payers that funds the subsidy for everyone else on the grid.

On renewables specifically: Railways already runs one of India's largest corporate renewable procurement programmes under its own net zero commitment, independent of any deemed licensee status, so access to cheaper renewable power was never really the point of its eleven-year case in court. The point was the surcharge exemption. The same is true for Google. Extending this kind of status further is unlikely to meaningfully change how much renewable energy either side buys. It will change who pays the cost of keeping the rest of the grid solvent.

Green only on paper

The DDL grants  power procurement freedom to Google. The tech giant can source and structure its own power, including renewables, from anywhere in the country, instead of procuring whatever power mix the Andhra discom provides. 

Now, Google's own commitment is to 24/7 carbon-free energy, a specific standard requiring clean generation to match consumption hour by hour, not the annual offsetting that lets most companies call themselves green on paper. Meeting that standard depends on what fills the gap when electricity from renewable sources is not available.

Coal still generates roughly three-quarters of the electricity actually consumed on India's grid, even though it now makes up less than half of installed capacity. That is because coal plants run for far more hours in the year than solar or wind ever will. So, when the data facility draws standby power from the state discom to cover a dip in its renewable energy supply, that power is, more likely than not, coming from a coal fired plant.. 

So, a facility with a deemed distribution license and renewable strategy can still lean on a coal-heavy grid for its worst hours. 

Other states are watching, and other developers, including Reliance at its own Vizag area site, are measuring Andhra Pradesh's terms against their own.

Who pays matters more than who builds. The Electricity Act 2003 assumed large users consume and distributors distribute. Railways spent eleven years trying to argue its way around it, unsuccessfully. across that line through the courts. Andhra Pradesh opened the doors for Google in a matter of months. 

Whether regulators elsewhere accept that as a legitimate new category, or treat it similarly to the Railways, remains to be seen.

Mahak Agrawal is Country Head (India) at Riding Sunbeams, a UK-based social enterprise working on direct integration of renewable energy into rail traction networks. 

Bhaskar Natarajan is an independent clean energy and sustainability consultant. 

The views expressed here are personal.

[Edit: Bhasker Tripathi, Shaswata Kundu Chaudhuri; Production: Paridhi Choudhary]