THE FUTURE OF DATA CENTRES IN SINGAPORE

1. What are the challenges I might face when trying to develop a data centre in Singapore?

• Energy and Sustainability: Singapore’s Green Plan 2030 aims to build a sustainable future and achieve net-zero emissions by 2050. To do so requires proper management of data centres due to their intensive consumption of both energy and water. A moratorium on new data centre projects was imposed in 2019 to address growing sustainability and resource constraints. Data centres accounted for approximately 7% of Singapore’s total electricity consumption in 2020, a significant share for such a small nation. Although the moratorium was lifted in phases in 2022, new data centre projects remain subject to strict efficiency and sustainability requirements, and approvals for new centres remain scarce. 
• Power Supply and Grid Dependence: As data centre capacities exceed 100 MW, their immense demand for power remains an issue to be addressed globally.  The challenge is exacerbated for Singapore given the country’s limited size. With capacities exceeding 100 MW, energy supply in Singapore remains constrained. Lengthy timelines for grid infrastructure upgrades often conflict with aggressive construction schedules, making site selection a critical risk factor.
• Space Constraints and Climate: Singapore is a city-state with a total land area of approximately 735km2, which poses a challenge for developers. This may require innovative solutions, such as exploring the feasibility of vertical facilities. The space constraints mean developers frequently look to house their data centres in the surrounding region while headquartering management and operations in Singapore, leveraging that expertise from skilled specialists and professionals. Further, with temperatures ranging between 24-32c year-round, additional and innovative cooling measures are necessary to maintain optimal conditions in data centres.
• Regulatory Requirements: Cloud services and data centres in Singapore currently operate under voluntary advisory guidelines. Singapore however intends on tabling the long-anticipated Digital Infrastructure Act (DIA) in Parliament later this year, which will codify a refined set of advisory guidelines that incorporate industry feedback. The DIA will complement existing legislation such as the Cybersecurity Act to safeguard Singapore’s digital infrastructure by ensuring adoption of baseline security and resilience standards and alignment with global standards.  

2. How is Singapore addressing the challenges of power supply and the planning process? 

Singapore remains a preferred choice for data centre investments, owing to its economic stability, well-developed infrastructure, and highly skilled specialists and professionals. Singapore addresses challenges in power supply through renewable energy, sustainability, and long-term planning strategies. 

Key measures include:

• Exploration of Renewable Energy Sources: Singapore’s data centre operators are exploring hydrogen, solar power, fuel cells, and ammonia, to meet increasing energy demands while reducing carbon emissions. Small modular nuclear reactors are also being studied as a potential energy source. To address solar intermittency, Singapore launched Southeast Asia's largest energy storage system (285 megawatt-hour) in February 2023, which was commissioned in just six months – the fastest deployment of an energy storage system of this scale globally. 
• Sustainability Initiatives: New data centres must now meet stringent requirements, including best-in-class Power Usage Effectiveness (PUE), use of green technologies, and efficient land, water, and energy utilisation. The Green Data Centre Roadmap launched in May 2024 sets a PUE requirement that is lower than the global average in 2022 and aims to significantly reduce their Water Usage Effectiveness index to bring it closer to global averages within 10 years. 

To support these efforts, the Economic Development Board offers investment allowances and efficiency grants to incentivise sustainable development. Under the GDCR, at least 300 MW of additional capacity will be provided for data centres, with further capacity contingent on green energy use.

• Development of Energy Infrastructure and Diversifying Supply Sources: Being a small nation, Singapore relies heavily on its strengths in trade to support its data centre initiatives. 

Singapore’s first import of renewable energy in June 2022 consisted of 100 MW of hydropower from Laos via Thailand and Malaysia and targets up to 6 GW of low-carbon electricity by 2035, up from the 4 GW announced in 2021. In addition, conditional approval has been obtained for the SunCable (Australia–Asia Power Link) project which aims to deliver 1.75 GW of solar power from Australia via a 4,300km subsea cable. 

There is also a newly established Special Economic Zone (SEZ) comprising Singapore and the Malaysian state of Johor (which is connected to Singapore via existing land links), and is strategically designed to capitalise on the complementary strengths of both countries, with Malaysia mitigating Singapore’s land scarcity woes. Businesses in the SEZ can benefit from both Singapore’s expertise and stability, and Malaysia’s cost-effective land and operational scalability. Nvidia, AirTrunk, and Microsoft have either begun operating, or have plans to operate data centres in Johor, whilst DayOne Data Centres Singapore recently secured approximately $3.5bn worth of financing for its green data centres in the SEZ.

3. What other changes could be made to help the data centre industry grow and stay competitive in Singapore?

Singapore is strengthening its position as a global business and innovation hub by investing over $575m into artificial intelligence within the next five years. The recent Singapore Data Centre World conference featured universal themes of efficiency and sustainability, critical infrastructure, and AI data centre development, underscoring global challenges in the data centre sector. Although city-states face certain challenges, Singapore can leverage its strengths to innovate and pioneer solutions to mitigate challenges and maintain competitiveness. 

To support sustainable expansion in the data centre sector, Singapore can accelerate the adoption of next-generation cooling technologies like direct-to-chip systems and immersion cooling. A new standard (‘Singapore’s Tropical Data Centre standard (SS697:2023)’) has just been unveiled, aiming to reduce the energy consumption of IT equipment in data centres by at least 30%. The standard, which is one of the world’s first in terms when addressing climate challenges in the tropics, allows adopters to potentially gain a further 2% to 5% energy saving on the cooling systems, with every 1c increase in the data centre operating temperature.

Another critical lever for ensuring Singapore’s long-term growth and competitiveness lies in strengthening research, development, and talent cultivation, as the industry evolves rapidly to meet sustainability demands, AI workloads, and new cooling technologies. Singapore could invest in deep tech innovation and workforce upskilling to build on existing strengths in skilled human resources, trade accessibility, and political stability, entrenching Singapore’s preferred location status for data centre owner/operators’ headquarters. Incorporating modules relating to the data centre sector into the educational syllabus will also assist in laying the groundwork for in shaping a new generation of future-ready and technology-driven workforce. 

Establishing research and development hubs for green data infrastructure, possibly in partnership with local universities or research institutions and key players in the sector, can drive the development of resource-efficient solutions. Evidence of this is emerging: Equinix Inc. (who operates six data centres in Singapore and 260 centres globally) and Singapore’s Centre for Energy Research and Technology have jointly established a co-innovation facility aimed at fast-tracking testing and development of cutting-edge solutions in low-carbon energy, high-efficiency cooling, circularity, and energy efficiency optimisation for data centres. Such advancements will bolster the future of digital infrastructure and services in Singapore and paves the way forward for similar tropical regions, whilst supporting broader sustainability objectives.