ASEAN Digital Growth vs. Energy Goals
Source: ember-energy.org
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Global digitalisation trends, including cloud computing and AI, are fueling ICT industry growth, increasing pressure to meet climate commitments. The power sector's slow decarbonisation raises concerns about electricity demand and emissions. The IEA projects that Southeast Asia’s data centre electricity use will nearly double by 2030 compared to 2024, highlighting the need for energy efficiency and clean energy.
The six major ASEAN economies—Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam—are becoming data centre hotspots, with approximately 2.9 GW of capacity in the pipeline. However, the power grids for most of these data centres rely on fossil fuels, posing a challenge for tech companies' renewable energy targets. Data centres could account for 2-30% of national electricity demand by 2030 in all these countries, excluding Viet Nam, increasing emissions and challenging their power sectors.
Malaysia is expected to be ASEAN’s fastest-growing data centre hub, with power demand reaching 68 TWh by 2030 from 9 TWh in 2024, accounting for 30% of national power consumption and surpassing Singapore’s 57 TWh of total power use in 2023. Growth is projected to be slower in Singapore and Thailand, while Indonesia and the Philippines show increases, and Viet Nam sees a small rise. Driven by coal and gas, Malaysia’s data centre growth could lead to a sevenfold increase in emissions from 5.9 MtCO2e in 2024 to 40 MtCO2e in 2030, the highest among other countries. Indonesia’s data centre power sector emission is expected to quadruple (+13 MtCO2e), while the Philippines’ emission growth will rise by 14 times, from 0.8 MtCO2e in 2024 to 10.5 MtCO2e by 2030.
Around 30% of data centre electricity demand in 2030 can be met with wind and solar via the grids, without battery storage, indicating that battery costs are not a barrier. Battery storage will still play a vital role in meeting more electricity demand over the medium to long term. More robust procurement options in ASEAN countries, such as virtual PPAs and green tariffs, should be more accessible and reliable to allow smaller data centre companies to afford a solar and wind supply. Expanding these options can improve access to and affordability of solar and wind, while broader programs and targeted incentives can accelerate storage adoption alongside intermittent renewables.
Supportive policies for data centres to procure solar and wind and adopt energy efficiency are essential for sustainable data centre growth. Beyond unbundled Renewable Energy Certificates, Power Purchase Agreements (PPAs) are a preferred way globally for giant tech companies to secure a stable renewables supply with a guaranteed long-term agreement. Therefore, more accessible corporate PPAs can drive indirect investments in renewables.
Faster solar and wind power deployment in ASEAN, energy efficiency gains in the data centre industry and sectoral requirements guiding data centre growth are crucial to sustainably managing growing demand. Accelerating solar and wind deployment and integrating energy efficiency from the design phase are essential to reduce emissions from data centre power use. Governments and industry should collaborate to set clear efficiency goals and support this transition through national frameworks and targeted incentives. Strengthening collaboration and improving data transparency will be key to ensuring that data centres in ASEAN drive both digital growth and sustainable energy progress.
ASEAN’s data centre industry risks derailing energy transition goals without action. Prioritising solar and wind power and energy efficiency, supported by strong policies, a national framework for data centres and collaboration, would help ensure data centres drive sustainable digital growth rather than deepen reliance on fossil fuels. The growth of data centres is placing pressure on power systems across ASEAN, where approximately 70% of electricity is generated from coal, oil and gas. To ensure sustainable growth and accelerate the energy transition, it is vital to scale up renewable energy and modernise infrastructure in data centre hubs through strategic investments and regional collaboration.
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