Interim report: Green fintech and data centres in Singapore

Lai, Karen; Chow, Winston; Liu, Felicia

Abstract

The global demand for data centres (DCs) has been increasing rapidly with the growing use of Internet services and cloud storage. Singapore is a key DC hub in Southeast Asia, attracting significant investments and supporting the city-state's digital economy. However, concerns about energy consumption and carbon emissions led to a moratorium on new DC construction in 2019, which was lifted in 2022 with new environmental requirements. This report presents interim findings from a research study on the future of green fintech and data centres in Singapore. Taking an interdisciplinary approach, we examine the economic, environmental, and regulatory dimensions of sustainable DC futures in Singapore, with the view of identifying transferable lessons to the rest of Southeast Asia and other tropical geographies. We identify four complementary factors that contribute to Singapore’s current DC hub status in Asia Pacific: mature infrastructural network; trusted regulatory environment and political stability; physical environment free from natural disasters; and agglomeration effect of DC operators and related industry actors in attracting skilled works and international corporations into Singapore’s DC ecosystem. However, with the prospect of higher costs and increasing regulatory restrictions on constructing new DCs, there is an emerging trend of DC projects and services shifting to neighbouring countries. Singapore’s data overflow points to three possible development trajectories: spillover markets (into Johor Bahru and Batam); development of sovereign neutral zones (akin to a freeport) with data securely stored off Singaporean shores; and decentralised model of growing DC capacities in the Southeast Asia region instead of a concentrated DC hub. However, emerging DC markets in the region face challenges such as lack of infrastructure, shortage of skilled labour, and uncertain political, regulatory and legal environments. The study highlights unique decarbonisation and sustainability challenges faced by tropical DCs in densely built-up areas. Key barriers include: the absence of free air cooling; overreliance on Power Usage Efficiency (PUE) as a sustainability indicator; inadequate attention to water efficiency; lack of viable renewables; the highly risk-averse culture in the DC sector; and risk of greenwashing for green financing solutions. Navigating sustainable pathways for Singapore’s DC sector presents environmental, economic and technical challenges that will require collaboration between experts and policy-makers in digital, environmental, energy and infrastructure, and financial sectors. Developing a skilled multi-sectoral DC labour market and establishing an industry association could be important in securing a sustainable future for the DC sector in Singapore.

Citation

Lai, K., Chow, W., & Liu, F. (2023). Interim report: Green fintech and data centres in Singapore. Singapore Green Finance Centre

• Report Type: Research Report
• Publication Date: 2023-08
• Deposit Date: Oct 17, 2024
• Publicly Available Date: Oct 21, 2024
• Public URL: https://durham-repository.worktribe.com/output/2961634
• Publisher URL: https://www.singaporegreenfinance.com/wp-content/uploads/2023/08/Interim-Report-Green-FinTech-and-Data-Centres-in-Singapore-Final.pdf