Data centres expected to add pressure on Singapore’s energy supply: survey

[SINGAPORE] Singapore’s data centre growth is expected to add pressure on the Republic’s energy supply, while boosting appetite for energy storage solutions and grid upgrades, a new industry survey showed.

Of 100 energy sector professionals polled across South-east Asia, nearly 45 per cent cited “increased pressure on energy supply and infrastructure” as the biggest impact of data centre growth on Singapore’s energy sector by 2030.

Another 31 per cent expect the biggest impact to be increased demand for energy storage and grid upgrades.

These were among the key findings of this year’s edition of the State of the Energy Transition survey, conducted annually by the Sustainable Energy Association of Singapore (Seas).

The industry is watching if data centres’ energy demand will impact electricity prices, as well as whether infrastructure development is keeping pace, Seas’ executive director Kavita Gandhi told The Business Times.

She highlighted that the supply of clean energy “is not coming at the pace at which the data centres are being built up”.

Of the survey’s respondents, only 13 per cent cited greater renewable energy deployment as the key impact of data centre growth.

This is even though Singapore is pushing for data centres to go green. Its latest allocation of data centre capacity mandates that at least 50 per cent of the allocated capacity should be powered by green energy sources – such as vertical solar, biomethane or green hydrogen.

While data centres have huge potential to drive clean energy adoption, there is “a little bit of pessimism” around doing so, said Gandhi.

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Seas had previously released a white paper flagging the challenges, such as opacity around project evaluation methods and how energy procurement mechanisms have not evolved to suit green sources.

“There’s a lot of bilateral discussion between the data centres and the renewable energy developers. We had brought up some of the areas where there were uncertainties in the white paper, and I think it has still been status quo,” she said.

AI in energy sector

Separately, the survey found the energy industry is optimistic about AI adoption, but faces cost and data quality challenges.

Some 57 per cent of respondents said that AI will be “significant” in accelerating Singapore’s energy transition over the next five years.

Over 35 per cent said that their organisations are running AI pilot projects, while another third indicated that their organisations are exploring opportunities.

However, almost 60 per cent cited data quality and availability, alongside implementation cost, as the biggest barriers.

Gandhi noted that AI has significant use cases in energy; for instance, it can improve the yield of solar power systems.

“(Previously), you could not see exactly which were the panels that were malfunctioning or was the system delivering the yield that it had promised… You can track a lot more, and every extra kilowatt that you can get is money,” she said.

AI can also boost energy efficiency. For instance, it can assist with load shifting, where electricity consumption is shifted to periods with relatively lower demand.

However, the availability for training data for AI is a challenge, due to the niche and technical nature of clean energy, Gandhi noted.

Asean Power Grid in focus

The survey also looked into the impact of this year’s Middle East conflict on business sentiment. Of the respondents, 35 per cent said that the war has affected their business “moderately”, while 31 per cent said it has done so “slightly”.

The biggest impacts include delayed investment decisions and a greater interest in regional or local solutions.

“Everybody wants to wait and watch, especially if you’re taking a big decision in terms of how you’re going to procure your clean energy,” Gandhi noted.

But with the greater interest in regional solutions, she is optimistic about the development of the Asean Power Grid (APG) – the effort to link up member states’ power systems for electricity trade by 2045.

This is especially with Singapore taking up the Asean chairmanship in 2027.

Over 60 per cent of respondents believe that the APG will expand bilateral and sub-regional power trading arrangements, but that a fully-integrated regional grid will remain some way off.

Another 24 per cent are more optimistic, expecting significant cross-border power trading within the next decade.

Gandhi believes that the “economic imperative” for the APG has grown, especially as each country vies to meet its own climate goals. The trade of renewable energy certificates also opens up new opportunities.

“It’s a whole new industry that’s going to be developed around this. So I think now it will not just be talk. I think there will be action,” she said.