Investment
The data center industry is continuing to grow, and a lot of electricity will be consumed to properly power these operations. With the ongoing trend of Environmental, Social and Corporate Governance (ESG) and the ‘Going Green’ movement, what role does sustainability play in aiding data center growth?
Data center power consumption
The entire data center industry uses over 90 billion kilowatt-hours of electricity annually which is the same output as 34 coal power plants. Data center capacity is based on its most limited resource which is electricity, measured by kW or MW. In order to run a successful data center, however, it must be located in an area that lets it consume that much power without interruption.
The emergence of renewable energy
As energy consumption increases, data centers need to be sustainable and the only way for that is through renewable energy. Renewable energy is seen as one way to expand the capacity of the Philippines to power data centers.
There are more reasons to be bullish about renewable energy: It helps reduce greenhouse gas emissions from fossil fuels, diversifies the energy supplies, and lessens dependence on imported fuels.
The International Renewable Energy Agency (IRENA) stated in their report that renewable energy in the Philippines has been generating steady traction, with solar energy capacity alone rising by 1,370 MW solar energy capacity in 2021. The growth of renewable energy can help bolster the expansion of the industrial sector as lower costs of electricity can benefit industries that rely massively on power — including data centers.
Why going green benefits data centers
This is great news for the data center industry. Recently, Europe is facing power difficulties in light of the strain on energy resources given the ongoing Russian war with Ukraine. Data centers in the EU amount to 2.7% of the electricity demand in 2018 and given the upswing in digitalization, this number could only get higher. Energy allocation can become less of an issue if there is a lower cost of energy thanks to renewable energy.
Data centers in the Philippines
The data center sector in the Philippines continues to gain investment interest with Santos Knight Frank tracking a total of 220 MW worth of expressed interest, 90 MW of which were recorded in the second quarter of 2022 alone. Santos Knight Frank projects that the existing 94 WM total IT capacity of data centers will double in the next two to three years.
There are numerous factors that continue to drive this interest in the country such as the new ruling in Singapore on data center construction, giving incentives to construct data centers in the Philippines instead under the Strategic Investment Priority Plan. Asia Pacific has about 8,700 MW capacity making there plenty of room to grow in the Philippines for the data center market.
Your partner for data centers
If data centers are something you are keen on exploring as an investment option, having the right experienced partner is the first step. Santos Knight Frank has a full-service data center real estate team in the Philippines and globally, offering services such as leasing, consultancy land acquisition, facilities management, project management, technical services & engineering solutions. Just visit our website and speak to our real estate practitioners at https://santosknightfrank.com/.
If you want to know more about Data Centers, you can also read about How Data Centers Are Developed.
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