Setting the scene

ASEAN’s data centres electricity demand keeps growing

Data centre boom could drive power use up to 30% of Malaysia’s national demand and increase the Philippines’ data centre emissions up to fourteen times higher by 2030.

As digitalisation accelerates, public scrutiny has mounted pressure on the Information, Communication and Technology (ICT) industry to decarbonise in line with global climate commitments. The ICT sector is estimated to account for up to 2.1% to 3.9% of global greenhouse gas emissions—comparable to Indonesia’s 3.6% share of global emissions in 2023. This figure is expected to rise rapidly due to increasing demand for data storage, processing, and the growing use of generative Artificial Intelligence (AI).

The industry’s rapid expansion in recent times has sparked concerns about its sustainability impacts, not only in terms of energy use but also water consumption. As essential digital infrastructure, data centres are at the heart of this growth, yet their rise comes with environmental costs. High water usage for cooling systems used in the facilities can strain local supplies, especially in areas already facing scarcity. 

Furthermore, if the power sector fails to decarbonise at the same pace, the growth of data centres could lead to a significant rise in emissions, potentially 7.6 times higher than those reported by giant tech companies in 2023. Data centres are estimated to account for one-third (360 TWh) of overall ICT sector electricity use, which exceeded 1,000 TWh in 2023, equivalent to 4% of global electricity use. This report focuses specifically on what ASEAN’s data centre boom means for the region’s power sector decarbonisation.

Digitalisation trends such as cloud computing and AI have driven a global surge in data centres, led by the United States, which hosts 45% of the world’s operational facilities, consuming 4.4% of the country’s electricity. This trend is now spreading globally, as US tech giants expand internationally. 

Southeast Asia has emerged as a key destination, with data centres rapidly expanding to support the region’s growing digital economy, cloud computing and AI ecosystems, positioning it as the next major data centre hotspot. The Asia-Pacific (APAC) region is projected to account for 34% of global operational capacity by 2028, with ASEAN contributing 51% of the pipeline in key APAC markets.

However, according to the World Bank, the largest share of emissions in the ICT sector comes from the APAC region, driven by high numbers of broadband and mobile subscriptions combined with electricity use from fossil fuel-dominated grids. This highlights the significant role energy consumption plays in the sector’s emissions.

Without proper mitigation, rising power consumption from data centres could make it more difficult for countries to meet their climate targets. The IEA forecasts that data centres’ electricity consumption in ASEAN will nearly double by 2030 compared to 2024 levels. This underscores the urgent need for the industry to prioritise energy efficiency and solar and wind solutions to ensure its growth remains sustainable.

Many US data centre companies are leveraging their global presence by expanding facilities overseas. Giant tech firms like Google, Amazon Web Services (AWS) and Microsoft are building data centres in ASEAN, particularly in Singapore, Malaysia, Indonesia and Thailand. 

As the region emerges as a global data centre hotspot, thanks to lower construction costs and electricity tariffs compared to the global average, concerns are also growing over the surge in power demand these facilities may bring.

Singapore

With 1 GW of operational data centre capacity as of February 2025, Singapore ranks as the world’s fifth-largest data centre market and the leading hub in Southeast Asia. However, a shortage of land and limited power resources have slowed down the industry’s growth, especially following the 2019 moratorium on new data centre developments. 

Although the moratorium was lifted in 2022 with the introduction of the Data Centre-Call For Application (DC-CFA), Singapore has adopted a more selective approach to data centre approvals, limiting installed capacity and enforcing stricter eligibility criteria. The country welcomes projects that promote energy efficiency and the use of green power, ensuring a sustainability push in the data centre industry. As a result, industry players have expanded into neighbouring markets, especially Indonesia and Malaysia.

Malaysia

With lower land and energy costs, proximity to Singapore and supportive government policies, Malaysia is positioning itself as ASEAN’s Digital Capital, targeting a 35% digital economy contribution to GDP in 2030. As of February 2025, the country hosts 507 MW of operational data centre capacity, mostly concentrated in Johor. This is expected to grow rapidly to 1.96 GW of installed capacity in the coming years, making it the fastest-growing data centre market in the region. 

However, there is a growing concern about the country’s ability to meet the surge in electricity demand due to power constraints. Recently, the Johor state government rejected almost 30% of data centre applications, citing energy efficiency among the reasons. In response, Malaysia is developing a 1,000 MW solar farm to supply clean energy to the Johor-Singapore Special Economic Zone (JSSEZ), which aims to spur businesses in the data centre supply chain.

Indonesia

As ASEAN’s third-largest data centre market, Indonesia hosts 307 MW of operating data centre capacity as of February 2025, primarily located in Greater Jakarta. Strategically positioned near Singapore, Batam City in the Riau Islands province is emerging as Indonesia’s secondary data centre hub. 

Under the National Digital Economy Strategy 2030, the country aims for the digital economy to contribute 20% of GDP by 2045. However, rising regulatory risks tied to Indonesia’s coal-powered infrastructure have raised concerns among data centre customers. This makes solar and wind energy adoption increasingly crucial for Indonesia to remain competitive in the region. 

Thailand

Thailand has shown steady growth in data centres over the past three years. A total of 111 MW operational data centres exists in the country as of February 2025. By July 2024, the Board of Investment had received 37 investment project proposals worth a combined 98.6 billion Thai baht. 

The country’s data centre growth is expected to be driven mainly by co-location facilities, where companies rent space in third-party data centres located off premises, rather than building their own. These data centres host the infrastructure, while companies manage their own servers, storage and firewalls.

The Philippines

Favourable policies, including tax incentives and streamlined regulations, have attracted data centre providers to build a presence in the Philippines. The government anticipates a fivefold increase in data centre capacity, reaching 300 MW by 2025. Initiatives like the National Broadband Program and the Digital Transformation Strategy specifically target the growth of digital infrastructure, including the data centre market. 

The construction of Narra Technology Park marks the country’s first and largest hyperscale data centre, incorporating sustainability in its design and operations. However, concerns over an unsteady power supply and high electricity costs continue to hinder the country’s data centre growth compared to its neighbours.

Viet Nam

Viet Nam’s ambition to grow its data centre industry began with the National Digital Transformation Programme, looking ahead to 2030. Although the country currently has the lowest anticipated data centre capacity in the region, it aims to rank among the top 50 countries in the ICT development index and become the third-largest digital economy in ASEAN by 2030.

As one of ASEAN’s strongest manufacturing hubs, Viet Nam has already experienced power shortages during peak months, highlighting the rapid growth in electricity demand. These constraints could pose growing challenges for the data centre industry. By 2025, the government aims to introduce green standards for data centres to address climate impacts, with a focus on improving energy efficiency.

Some studies forecast a 19.4% annual growth of data centre capacity in the region from 2022 to 2026 and 19% from 2024 to 2028. This steady growth of the data centre industry in Southeast Asia will naturally lead to an increase in power demand from the sector. The magnitude of this growth will vary markedly across the region.

Among the region’s top six data centre hotspots, Malaysia is expected to see the steepest rise in power consumption, with an expected sevenfold increase from just 8.5 TWh in 2024 to 68 TWh in 2030. To put this into perspective, this is equivalent to adding  Singapore’s entire power consumption in 2023 (57 TWh). Such growth will also push the share of data centre power demand to 30% of the country’s total demand in 2030. 

Indonesia’s data centres are likely to quadruple their power consumption, rising from 6.7 TWh in 2024 to 26 TWh by 2030. The Philippines is expected to see even sharper growth, with electricity demand from its data centres increasing from 1.1 TWh in 2024 to 20 TWh in 2030.

On the other hand, Singapore and Thailand’s data centre power demand is expected to grow more gradually, slightly increasing from 5 to 8.4 TWh and from 2.4 to 6 TWh, respectively. In Viet Nam, growth is likely to remain minimal based on current trends, requiring 0.7 TWh in 2024 and 1.2 TWh in 2030.

To meet the projected surge in data centre power demand, the region’s top five data centre-consuming countries must scale up solar and wind energy investment. An estimated $45 to 75 billion investments in solar and wind capacity will be needed by 2030 to power data centres sustainably and avoid deepening dependence on fossil fuels.

It is important to note, however, that uncertainty remains around the pace of data centre growth in the coming years. This will be influenced by algorithmic developments, computation efficiency trends in software and hardware, and broader economic factors affecting the investment and supply chain.

Although data centre power demand may seem small in the broader energy landscape, the sector’s rapid growth presents challenges for maintaining a reliable power supply. If left unaddressed, the digital infrastructure ambitions of these six countries could strain electricity availability for other sectors, given the energy-intensive nature of the expanding ICT industry.

Data centre industry stakeholders are increasingly recognising the importance of sustainability. There is a growing preference for green data centres, driven by the need to improve energy and resource efficiency, strengthen client value propositions and reduce emissions impact. For example, the Nordics are increasingly attractive as a region to data centre companies, thanks to abundant renewable resources, robust grid infrastructure and the lowest energy prices in Europe.

Although going green may incur high upfront capital costs, it can eventually reduce long-term costs and demonstrate leadership in sustainability. Greening data centres involves, among others, improving energy efficiency and using solar and wind power. Both measures can lower long-term costs due to lower power usage and less exposure to fossil fuel price volatility. 

For these reasons, industry players, especially the world’s leading ICT companies, are moving ambitiously to decarbonise their value chains as effectively as possible.

Data centres hinge on access to reliable and clean electricity to remain competitive in the global market. Sourcing renewables and implementing energy efficiency measures are key considerations in typical data centre financing frameworks. However, due to limited options and the early stage of corporate renewables procurement mechanisms in some of these countries, most data centres still rely on fossil fuel-reliant grids, constraining efforts to reduce emissions from power consumption. Meanwhile, relying on grids, paired with Renewable Energy Certificates (RECs procurement), exposes companies to price risks. 

This can, unfortunately, lead to more fossil generation if renewables growth does not keep pace with demand. It not only results in higher emissions but also exposes ASEAN countries to several long-term risks, including fossil fuel price volatility, geopolitical disruptions, trade restrictions, stranded fossil fuel assets, rising costs of fossil fuels and non-compliance with international carbon tariffs.

ASEAN data centre emissions will keep rising, led by Malaysia, the Philippines and Indonesia, due to fossil-dependent grids

As Malaysia’s electricity grid is dominated by coal and gas, the country’s rapid data centre growth could drive a sevenfold increase in emissions from 2024 to 2030—solely from power consumption, excluding emissions from construction, transportation and other activities.

Indonesia’s Java-Madura-Bali (JAMALI) grid emissions are projected to rise from 5 MtCO2e in 2024 to 19 MtCO2e by 2030. Most data centres are already concentrated in the JAMALI grid, which relies heavily on coal and gas power, making electricity consumption a major driver of emissions.

The Luzon-Visayas grid’s heavy reliance on coal results in high emission factors, causing emissions to surge 14 times from 0.8 MtCO2e in 2024 to 10.5 MtCO2e by 2030. While the national power grids in the Philippines are interconnected, universal emission factors are not yet publicly available.

Meanwhile, emissions from data centre power consumption in Singapore and Thailand remain relatively stable. Singapore’s emissions see minimal growth between 2024 and 2030, rising by just 1.5 MtCO2e, while Thailand experiences a modest increase, doubling its 2024 level by 2030.

The world’s leading ICT companies set ambitious renewable goals, underscoring the urgent need for cleaner grids and energy-efficient data centres

Major tech companies are making ambitious commitments to renewables. Amazon Web Services pledged to power 100% of its global operations with renewables by 2025 and reached this target ahead of schedule in 2023. The company has contracted 274 MW of renewable capacity in Indonesia and Singapore, with projects at various stages of development. Similarly, Meta, the world’s fifth most valuable tech firm, met its 100% renewables target in 2020. In Singapore, where it owns Southeast Asia’s largest data centre capacity, Meta procures 174 MW of solar and wind energy.

Google, the third-largest tech company by market value, aims to run on 24/7 carbon-free energy across all grids it uses by 2030, emphasising that its ultimate goal is to accelerate grid-wide decarbonisation.

However, progress has been slow in APAC, especially in Southeast Asia. In 2023, only 4.1 GWh of Google’s total 2.8 TWh electricity consumption in the region came from renewable sources—just 0.15%. In Indonesia and Singapore, where it operates data centres, only 13% and 4% of hourly electricity consumption, respectively, is carbon-free, reflecting the limited availability of renewables to meet its demand. However, the commitment of major tech companies to renewables highlights the growing importance of sustainability in the data centre industry. 

RE100 revealed that, after unbundled RECs, corporate Power Purchase Agreements (PPAs) are a preferred way for global companies to procure renewables. Technology companies operating data centres account for over 30% of the 120 GW operational renewables capacity procured through PPAs. However, unbundled RECs have been far more dominant in Asia, highlighting the limited access to PPA. 

The disparity in renewables availability emphasises the urgent need for stronger policy support to accelerate decarbonisation. To maintain Southeast Asia’s competitiveness, establishing sectoral requirements for data centres, prioritising energy efficiency and securing reliable clean electricity will be crucial to enabling a more sustainable digital future.