Demand for data centers has exploded globally, as companies and governments all around the world pursue greater digitalization. Data centers store large amounts of data for organizations, and provide connectivity to support online activities, making them the backbone of the digital economy.
However, data centers are also intensive users of resources such as land, water and energy. Traditional data centers use a lot of energy to power computer servers to store, process and transit data. The servers in turn produce heat, and need to be cooled by cooling systems. This cooling again requires a lot of energy and generates heat. As a result, data centers were responsible for 300m tons of carbon emissions worldwide in 2020, and account for 1%–1.5% of global electricity use.
Globally, hyperscale and edge computing are the fastest growing sectors, reflecting the need for scale to address growing overall demand as well as new requirements for ultra-low latency services. Practical steps to improve sustainability look very different at these two ends of the market. Compared with hyperscale, edge computing drives a different model of operations, with smaller data centers and increased use of co-location services. Geopolitical tension and national security concerns, and concerns about supply chain disruption, have seen governments re-examine data localization requirements. Technology developments, such as the explosion of artificial intelligence and the promise of quantum computing, may further push demand for new data centers, or drive the modernization of legacy ones.
This all adds up to more data centers, in more places, with more ambitious sustainability targets and more stringent eco-regulation. We are seeing more data centers built outside of traditional major markets – to provide lower latency and localize data on the one hand, or to address land, water, energy and other constraints in major markets on the other.
The Singapore Experience
Singapore consistently ranks as one of the most desirable data center locations in the world, due to its robust fiber broadband connectivity, strong cyber-security framework and availability of cloud services. It is also the landing site for a dense network of subsea cables connecting it to other parts of the world, which are critical to data center operations. There were more than 70 operational data centers in Singapore as of 2022, which accounted for 60% of South-East Asia’s total data center capacity. Many big-name tech companies such as Google and Meta have chosen Singapore to site their data centers and major data center operators Digital Realty and Equinix have also invested heavily in Singapore. In 2019, amid intense competition among countries to attract data center investments, Singapore quietly put a pause on the construction of new data centers. This was to buy time for the government to conduct a review on how to grow the data center industry in a more sustainable manner.
The environmental challenges posed by data centers are particularly acute in Singapore for multiple reasons. First, it is very short of the resources that are critical to data center operations: land, energy and water. With a small land area of 724km2, there is limited space in Singapore for data centers and many competing uses for land. Singapore also imports most of its electricity, and produces little clean energy. Further, due to Singapore’s year-round high temperatures and humidity, more energy is required to cool servers. Data centers now account for more than 7% of the country’s electricity use. If data center capacity were allowed to grow unchecked, this would present a substantial hurdle to achieving the government’s commitment to achieving net-zero emissions by 2050.
Singapore eventually lifted the moratorium on new data centers after three years, but made clear that it will be more selective of data center projects moving forward. In July 2022, the government called for applications for pilot projects that would fulfil new requirements for greener methods of operations. Singapore wants new data centers that are best in class in terms of resource efficiency, and applicants have been asked to provide their innovation and sustainability solutions to achieve this objective. Industry observers note that the pilot scheme represents a shift in strategy towards a private-led approach to building more sustainable data centers, after years of government-initiated and funded efforts. Importantly, the scheme could provide the government with vital intelligence from private operators so that it can roll out further policies or changes.
While the government has yet to announce who will take the coveted prize of a new data center permit, a clear message has been sent that Singapore is serious about meeting data center demand sustainably. This has encouraged research and development efforts and investments in innovative solutions by both government agencies and the private sector, which have already started to bear fruit. We explore some of these developments below.
Data Centers in Tropical Countries
Many data center operators choose to store their equipment at temperatures of 22 degrees Celsius and below, and relative humidity of 45% to 55%. This reflects the industry consensus on the optimum conditions required to give equipment housed in data centers the longest lifespan. While some countries are able to rely on outside air to cool data centers, such natural cooling is not an option for Singapore. Located near the equator, Singapore is almost always warm and wet. Its temperature and relative humidity are much higher than ideal, averaging 24 to 32 degrees Celsius and 70% to 80% respectively. This results in more energy being consumed to cool a typical data center in Singapore, where cooling systems can account for up to 40% of a data center’s total energy consumption.
In June 2023, the Infocomm Media Development Authority of Singapore (IMDA) launched a new sustainability standard that aims to make data centers in Singapore and other tropical climate countries more energy-efficient and help them save money by making it possible to operate at higher temperatures without compromising operational reliability. The standard, which is the first of its kind, establishes guidelines for the industry to safely raise the operating temperature of data centers in tropical climates and at higher humidity levels. Operating temperatures could be gradually increased to 26 degrees Celsius or more, allowing these data centers to benefit from cooling energy savings of between 2 and 5 per cent for every 1 degree Celsius increase.
The new standard has already been tested by several data center operators in Singapore. One of them is Digital Realty, which successfully reduced its energy usage by 2% to 3% by raising temperatures by 2 degrees Celsius at two of its data halls, with no detrimental effects or impairment observed during the trial. On the government’s part, it has also begun testing higher temperatures in a government data center. As a next step, to encourage greater adoption of the guidelines, the IMDA will be setting benchmarks for the industry in line with the new standard.
Innovative Energy Solutions
Because data centers are such big energy guzzlers, one of the main ways to make them greener is through the use of clean energy to fuel operations. Another way is to leverage on cutting-edge technology to improve energy efficiency.
Keen to reduce their carbon footprint, hyperscale data center operators lead in corporate renewable energy procurement, mainly through power purchase agreements. Due to Singapore’s space constraints, it faces inherent limitations in pursuing certain alternative energy options such as nuclear, wind, and geothermal power. Its current lack of clean energy sources and capacity to supply to data centers is a major challenge for players looking to fulfil sustainability objectives.
In the government’s call for applications for more sustainable data centers, applicants were asked to provide proposals for renewable energy use, and plans to invest in “innovative energy pathways” such as hydrogen to offset their carbon emissions footprint.
Two major data center operators, Equinix and Digital Realty, believe their proposals can make the cut, by relying on two of the next big things for data centers: hydrogen and liquid cooling.
Equinix is collaborating with the National University of Singapore to explore and develop hydrogen fuel cells as a power source for data centers in Singapore. Hydrogen fuel cells are a much cleaner alternative to burning fossil fuels. A fuel cell converts hydrogen into electricity with zero carbon emissions. Fuel cells are also able to generate high quality and reliable power. These factors make the potential of hydrogen as a sustainable fuel source, particularly as back-up power for data centers, enormous.
Digital Realty has partnered with CoolestDC, a spin-off from the National University of Singapore, to take advantage of new cooling solutions to improve efficiency. CoolestDC’s hybrid cooling technology circulates liquid through pipes to a network of cold plates connected to a server chassis. Liquid cooling is receiving a lot of attention as a solution to tackle the inefficient air-based cooling systems used in a large majority of data centers in South-East Asia. As liquid is a better conductor of heat compared with air, liquid cooling placed at heat-intensive spots can rapidly reduce temperature in a targeted manner that consumes much less energy and uses much less water. Digital Realty has piloted this technology at its newest data center in Singapore and will be looking to implement it in all its existing air-cooled data centers.
At the same time, the government is working on securing a potentially significant source of renewable energy to feed the demand for green power that any meaningful growth in the data center asset class in Singapore will require – that is, the ongoing tender for renewable energy imports into Singapore currently being undertaken by the Energy Market Authority of Singapore. The stated aim of the tender is to import up to 4GW of renewable energy into Singapore by 2035, which is expected to make up around 30% of Singapore’s electricity supply in 2035. The tender process has attracted a large number of bids from consortia consisting of local, regional and international bidders, with the bulk of such imported renewable energy most likely coming from Singapore’s neighboring countries Indonesia and Malaysia.
Given the market-based pricing for electricity sold by generating companies to the national grid in Singapore, it is expected that such renewable energy imports will require price certainty in the form of virtual power purchase agreements with reliable counterparties. Data centers need to demonstrate green sources of power, so data center operators could well be a class of offtake counterparties able to anchor demand for a significant proportion of the renewable energy to be imported into Singapore. In other words, data center operators and renewable energy importers may be able to work together to mutual benefit in meeting their respective needs for renewable power on the one hand and price certainty on the other. Financing such collaborations on a non-recourse basis could add complexity for both the renewable energy project and data center project (in addition to the complexities already inherent on either side of the equation). Any “project on project” risks and mitigants would need to be thought through carefully.
Floating Data Centre Park
Keppel, a Singapore conglomerate and regional market leader in the data center industry, has proposed to build a floating data center park (FDCP) using spare shipping docks. The FDCP is touted as a solution that alleviates land, water and energy constraints of traditional data centers. The FDCP features a modular design, which allows new floating data center modules to be readily developed and deployed, and older modules to be recycled for deployment in other locations.
Situated at near-shore locations, the FDCP aims to use seawater to cool its servers, thereby increasing cooling efficiency by up to 80%. It also avoids the use of potable or industrial water in cooling towers. In addition, it aims to optimize energy usage by operating on a green energy grid using hydrogen. The FDCP will have more data center capacity than has been constructed in Singapore over the past decade, according to Keppel.
Note: This article was first published in the PFI Global Infrastructure Report 2023 (on 12 July 2023). On 14 July 2023, the Singapore government announced that it will award about 80 MW of new capacity to four data center operators. For more details, please click here.
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