Sustainability is paramount for Singapore’s next gen data centres (Savills)

Singapore has announced that it is lifting a 2019 moratorium on the construction of new data centres, however government concerns about energy efficiency and consumption mean new facilities will need to meet rigorous standards.

In the short term, the number of new data centres will be very limited, with a maximum of three approvals in a new post-mortarium pilot phase, which begins in the second quarter of this year and which will last 12-18 months. The new data centres will also have a cap on their power use: all must be between 10MW and 30MW.

Jack Harkness, director, industrial & logistics, Asia at Savills, says: “The end of the moratorium and permission for new data centres is good news, as is the focus on sustainability, however with only three approvals in this pilot phase, competition will be fierce.”

The Singapore government imposed a moratorium on construction of new data centres in 2019, due to concerns about the amount of electricity they use. At present, the city-state has 70 data centres with aggregate capacity of 1000MW; the sector uses around 7% of Singapore’s electricity.

However in January, Minister for Trade and Industry Gan Kim Yong said: ““While we continue to welcome data centre investments, we intend to be more selective of which DCs we can accommodate. In particular, we seek to anchor DCs that are best in class in terms of resource efficiency, which can contribute towards Singapore’s economic and strategic objectives.”  An online meeting later outlined the government’s requirements for new centres.

Data centres use electricity to power the servers running inside them and more significantly to keep them cool, as thousands of servers running constantly generates a lot of heat.

The efficiency of data centres can be measured by Power Usage Effectiveness (PUE), a metric which evaluates the energy performance of a facility by calculating the ratio of the energy used as a whole to the energy used by the IT equipment alone. A perfect score would be 1. Singapore will require that new data centres have a PUE of 1.3 or lower. A typical data centre has a PUE of around 1.5-1,7, while the newest data centres in Australia and South Korea, for example, have target PUEs of 1.2-1.4.

Applicants with a track record in building and operating data centres in Singapore will be considered favourably, government officials said. In the longer term, Singapore is determined to remain a data and connectivity hub, they added.

The end of the moratorium is expected to provoke a rush of applications as data centre developers and operators compete to be one of the three approved data centres during the moratorium period. “We expect fierce competition for the limited permissions from developers and operators already present in the market,” says Harkness. “We may also see joint ventures between private equity real estate funds and operators, as we have seen in Australia and South Korea.

“The Singapore data centre market will be entering a new era, where efficiency is crucial. Over the longer term, as newer facilities with lower PUEs come onstream, we may see a flight to quality. This would create opportunities for redeveloping older data centres.”

This article was originally published in https://www.savills.com/prospects/sectors-sustainability-is-paramount-for-singapore-next-gen-data-centres.html