Data centres: Climate killers or green saviours?

The growing energy demands of data centres could just be the boost to green energy investment we need.

- David Fogarty

In an industrial park in Singapore's Paya Lebar district is a fortress-like multi-storey building with small windows and tight security. Outside, there are two banks of generators in case of a power failure.

Despite looking like some spy agency lair, its purpose is more mundane – it's a data centre, one of more than 70 in Singapore. And that number is set to grow.

Buildings like this one are an essential and increasingly important part of the global economy – we need them for everything from watching Netflix, creating AI-generated images (cats seem popular), online banking and blockchain transactions to cloud computing services.

But they have a dark side – they are energy guzzlers that can fuel climate change as humanity goes ever more digital. They contribute to 82 per cent of Singapore's information and communications sector emissions, and account for 7 per cent of the nation's total electricity consumption, according to the latest government figures.

In the United States, data centres could consume up to 9 per cent of US electricity generation by 2030, more than double the amount currently used, according to a recent study.

There's no stopping the data centre juggernaut. Tech giants Google, Microsoft, Meta and Amazon are forecast to spend US$198 billion (S$266 billion) on data centres, servers and artificial intelligence (AI) capabilities in 2024, up 34 per cent from 2023, according to a recent research note from the Macquarie Group, which is also a large data centre investor.

Mr Charles Yonts, head of Asian ESG Research at Macquarie Capital in Singapore, says total global data-centre capacity is forecast to increase from 49 gigawatts (GW) in 2023 to 164GW by 2028. Gigawatts refers to the power consumption capacity for computing and cooling – data centres generate a lot of heat.

Such rapid expansion sounds worrying, right?