Commentary: Where do data centres fit into Singapore's vision of green growth?
Though Singapore will be selective about building new data centres due to environmental concerns, we still need them when we are producing more data than ever before, says a business observer.
SINGAPORE: At Budget 2022, Singapore signalled its intent to step up climate action, with carbon tax hikes and a net-zero emissions goal by or around mid-century.
As emitters review plans to slash emissions, where do data centres fit in?
These giant warehouses packed with servers form the backbone of Singapore’s digital economy but have gained notoriety given their large energy consumption.
Data centres contribute about 7 per cent of Singapore’s total electricity consumption. With concerns about environmental sustainability and limited space, Singapore issued a moratorium on new data centres in 2019.
But lifting the moratorium was never a question of if, but when. Following a review, Trade and Industry Minister Gan Kim Yong said on Jan 11 that the country continues to welcome data centre investments but will be more “selective” of such projects moving forward.
Singapore has long been the data centre hub of Asia Pacific, accounting for 60 per cent of data centre capacity in the region, thanks to robust infrastructure, high-speed connectivity and the widespread adoption of digital technologies.
Policymakers surely recognise the benefits that they offer. Singapore’s data centre market is expected to attract significant investments of up to US$5 billion (S$6.8 billion) by 2026.
In a rapidly digitalising world producing more data than ever, this industry is undeniably essential to a growing economy.
Over three in four organisations agree that APAC business transformation needs “hyper-scale” – massive, business-critical data centres designed for the likes of Google and Amazon – to progress, according to a May 2021 study commissioned by global technology company ABB.
As Singapore seeks a greener path forward, it must take a hard look at the emerging challenges in the data centre industry and where data centres fit into this cleaner future.
WHY DATA CENTRES MATTER IN 2022
Data centre investments have driven growth and job opportunities.
According to a study by the United States Chamber of Commerce, the average data centre injects US$32.5 million to its local community each year, in the form of investments during the construction phase, the purchase and installation of various electrical components and the day-to-day operating expenses of the facility.
Each data centre creates high-value jobs in data security, network engineering, operations, project management and more.
Take Amazon for example – the tech giant recently announced investments of over US$5 billion to open new data centres in New Zealand, which will generate around 1,000 jobs over 15 years.
Looking at the bigger picture, the real economic significance of data centres is their role in the digital economy. Southeast Asia’s digital economy is expected to be worth US$360 billion by 2025 – a feat that cannot be achieved without robust data centres located within the region.
The further a business is to its data centre, the longer it takes to get the information it needs – which means more delays and frustration for customers. In a digital age of one-click purchases and instantaneous communication, a slow network connection would hold businesses back and stall growth.
The data centre industry, which stores, processes and transmits data, is the driving force behind fast-growing sectors like e-commerce and digital financial services.
As Singapore seeks to continue its growth momentum and cement its status as a global tech hub, data centres will play a pivotal role in the country’s post-pandemic recovery.
THE SKILLS IN HOT DEMAND
While demand for data grows exponentially, so will the demand for certain job skills. Expertise in cloud architecture, artificial intelligence and cybersecurity will be increasingly sought after.
Specific to Singapore, we are starting to see the emergence of a new skill gap, in the form of electrical engineers.
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Electrical design is one of the top roles that Singapore companies are looking to fill in 2022, according to an industry survey. Demand for all-rounded engineers with a keen understanding of various complex electrical components and how to make them work together is rising.
But like many parts of the economy, a tight labour market in Singapore has had ripple effects. Data centres operating in a niche space have had to redouble efforts to recruit fresh graduates, who often feel more inclined towards big consumer or household names.
Here is where perhaps more openness to tech talent, without a technical degree, can bring new opportunities including diversity in thought and ways of working.
With hiring managers looking to recruit talent from outside typical industries, adaptable skillsets and an open mindset could outweigh hard skills like coding – which can be acquired and honed eventually.
TACKLING THE SUSTAINABILITY DILEMMA
Singapore will undoubtedly still have to manage the environmental costs. Though Singapore continues to be the top APAC market for data centre deployment, the current moratorium has driven data centre players to look at setting up operations elsewhere in the region.
If Singapore is to maintain its competitive edge as a data centre hub, we will need to get creative in optimising our energy efficiency.
Technological innovation can help drive energy efficiency. Case studies on this abound – a community college in Ohio, US, automated their data centre’s heating and cooling systems and cut energy usage by more than half.
Closer to home, the Agency for Science, Technology and Research and KoolLogix developed an energy-efficient cooling system that reduces energy consumption by up to 50 per cent.
This stands testament to the strength of Singapore’s R&D and innovation capabilities, which offers an optimistic outlook for data centres here. New technologies will be key in enabling Singapore’s data centre industry to do much more with less resources.
DATA CENTRES UNDERPIN OUR GREEN ECONOMY
Demand for data has yet to peak. As we forge ahead into a world where COVID-19 is endemic, businesses will need to consider what this new digital economy will look like in the long term as challenges like sustainability and skill shortages remain.
Sustainable technologies like smart buildings rely on data to optimise electricity consumption for greater energy efficiency. As Singapore shifts towards cleaner sources of energy, data analytics in smart grid systems can help integrate renewables into the electricity supply.
Singapore is already flourishing as a data centre hub in Southeast Asia, but we must not lose the edge we have. Central to this would be proper planning and resource policy management.
Kent Chow is Data Segment Lead of the Asia Pacific, Middle East and Africa Region at ABB.