Accredited Investor Singapore

Cracking the Code of Greening Data Centres in Singapore

  • ESG

The data centre (DC) is the most important building in your life that you will likely never step foot in. Most people cannot visualize how much of their lives today involve the constant movement of data from database to database, generated by everything from banking transactions to social media posts, and from digital government services to healthcare and insurance. At the heart of all this data, is the data centre—where data is stored, computed, protected, and routed.

Tan Bee Lay

Chief Sustainability Officer at SDAX

A booming data centre industry powers growth but at a cost

Singapore’s regional hub status, robust infrastructure, and strong legal framework make it an attractive location for DCs that serve local, regional, and international data traffic. The country currently ranks second in terms of data centre market attractiveness. But even as more of these DCs are built to support the booming digital economy in the SEA region, the soaring electricity usage could compromise Singapore’s energy security while also being detrimental to environmental sustainability. 


Various reports have estimated that the global DC industry accounts for approximately 1%-2% of total electricity demand. In Singapore, that percentage rises to 7% of the country, with some studies predicting it could reach 12% by 2030. Trying to balance being an international hub that attracts crucial technology investment, versus the high carbon footprint of these DCs, is a key challenge facing policymakers.

Singapore is actively addressing the issues – can more be done?

So far, Singapore has taken various steps to promote sustainable data centres. The lifting of a moratorium on new DCs early this year was followed by a pilot exercise to drive the sustainable development of new DCs whereby only three new applications were approved for the pilot. Under the new direction, new data centres are mandated to have a power usage effectiveness (PUE) of 1.3 and below, down from a current average that is greater than 2.0. The PUE is a global metric used to determine the energy efficiency of a data centre, where the ideal number is 1.0 for peak efficiency. This would compel players to implement energy efficiency solutions at the design and build stage instead of relying on later retrofits.

On the policy front, the IMDA created the Green DC Standard that helps organisations establish systems and processes necessary to improve the energy efficiency of their DCs, using a recognized framework as well as a logical and consistent methodology to achieve continuous improvement in their DC facilities. This would be extremely valuable for existing DCs that are looking to retrofit solutions aimed at improving their PUE or other sustainability metrics. Other policies include raising the carbon tax by 2030 and increasing investments in cleantech technologies.

Here are several ways that we recommend as ways forward:

1. Stewardship

Stewardship — the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society—is becoming a critical component of the investment community, but more can be done to engrain this practice in balance with corporate interests. Greater stewardship in alignment between investors and asset managers, and facilitated by government bodies can further drive more sustainability focus amongst the owners of data centres.

2. Greater incentivisation

Key stakeholders should also channel more incentives that encourage private capital allocation to innovative cleantech startups, SMEs, and R&D commercialization efforts. This will spur the development of new technologies that can help reduce the sustainability impact of existing DCs in Singapore. An example of innovation in action is Coolest DC, a Singaporean deep-tech company that focuses on improving thermal management of DCs by retrofitting their integrated liquid cooling rack solutions to existing DC setups.

3. Retrofitting solutions for immediate results

While the future of DCs in Singapore has been mandated to be more sustainable, the industry should not ignore the benefits of retrofitting on existing DCs. Low-hanging fruit initiatives like replacing cooling systems with more efficient chillers, smart energy systems, LED lights and solar panels could rein in operational carbon. Capital allowances and rebates on carbon taxes should be considered to encourage DC owners to invest in retrofits.

In conclusion, as the digital economy continues to explode, the DC industry is set to continue its growth trajectory. Balancing this growth with a real commitment to sustainability is of paramount importance, and a high-priority mission for the sake of our collective modern livelihoods and progress.

Tan Bee Lay is Chief Sustainability Officer at SDAX, and oversees the enactment of SDAX’s ESG Mandate. A certified member of International Society of Sustainability Professionals (ISSP) and Senior Practising Management Consultant (PMC), Bee Lay has more than 20 years of experience as a management consultant, primarily in business and sustainability consulting. She has worked with both public and private sectors on de-carbonization strategies, sustainability policies and processes as well as carbon accounting in value chain management.