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How is India benefiting from the pause in data centre expansion in Singapore?

Thu 28 Oct 2021 |

Singapore data centre

In a pivot from the data centre expansion of the past several years, the government of Singapore has placed a moratorium on the construction of new data centres on the island. This restriction will likely have a significant effect on the data centre industry throughout Southeast Asia, particularly in India.

Why the moratorium?

Singapore elected to stop data centre expansion for several reasons. First, Singapore has been a data centre hub for many years – the third most desirable location to build a data centre in the world, according to a recent study by Digital Realty and EcoBusiness. This has led to a high density of data centres in Singapore – at least 93 separate facilities packed onto the small island.

Singapore also has a high number of submarine cables, providing data connectivity between Southeast Asian countries and the rest of the world. This has helped to cement Singapore’s position as a desirable location for enterprise data services.

However, data centres use an astonishing amount of energy – even with recent advancements inefficiency. Data centres use about 1% of the world’s total energy. But in Singapore, due to the high density of facilities, data centres account for approximately 7% of total energy consumption in Singapore.

Growth in demand for data centre services is expected to continue to grow worldwide, as the result of the adoption of data-intensive technologies like 5G and IoT, as well as the increase in digital services accelerated by the COVID-19 pandemic. If measures are not taken, by 2030 data centres could consume 12% of the energy in Singapore, upsetting the infrastructure for citizens and businesses, and negatively impacting the environment.

The Ministry of Trade and Industry (MTI) in Singapore responded first in 2019, and again with a refreshed message in 2021. The MTI said that as a result of the industry’s intensive use of resources like electricity and water, a temporary moratorium has been placed on the construction of new data centres. This is intended to give the government the time to create a strategy to balance business demands with environmental sustainability.

The pause in development was made, in part, due to an observed increase in the data centre developments approved for construction on industrial state land. In the past five years, 14 data centres were approved to add over 700 MW to the nation’s capacity. In comparison, the previous 5 years saw 12 approvals totalling 307 MW.

In a statement, MTI noted, “The Government has therefore decided to moderate the growth of data centres with a temporary pause on the release of state land for data centres, as well as the development of data centres on existing state land.”

Effect on India

With the construction of new data centres and expansion of existing facilities on hold – and no direction as to how long the moratorium will last – consumers are looking to different methods to meet the need for data centre services in the area. Many providers are shifting Southeast Asian strategies from Singapore to India.

For example, in March 2021 the Princeton Digital Group (PDG) – headquartered in Singapore – announced the construction of its first Indian data centre, to be launched in 2022. Mantra Data Centres and Yondr / Everstone each committed to Indian data centre construction projects worth over $1B USD each.

With the interest in Indian data centres growing, renewable energy has become a focus for companies in the country. For example, ReNew Power and RackBank recently announced a partnership to build a data centre in India powered by 100% renewable energy.

Demand for data centres in India was already strong, as the result of data-intensive technologies and increased data consumption spurred by the pandemic. As enterprises shift their focus to increasing capacity in Southeast Asia – as long as desirable Singapore is unavailable – the data centre industry in India is likely to get an increased and prolonged boost for projects including new construction as well as improved capacity and connectivity.

Written by Thu 28 Oct 2021

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data centre expansion India Singapore
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