As the Asia-Pacific region gears up for the artificial intelligence (AI) boom, the rapid expansion of energy-intensive data centres is raising concerns about the region’s clean energy transition. Countries from Singapore to India are increasingly focused on storing and processing data domestically to safeguard sensitive information amid growing geopolitical tensions, particularly between the US and China.
This domestic push will inevitably increase the demand for data centres, which in turn will put immense pressure on vital resources such as land, water, and, most critically, energy. This situation raises an important question: Can the region’s renewable energy capacity grow fast enough to meet this rising demand while still achieving net-zero emissions goals?
According to a recent Moody’s report, data centre capacity in the Asia-Pacific region is expected to double by 2028. Emerging data centre markets in countries like India, Indonesia, Malaysia, Thailand, and the Philippines are projected to experience growth rates of 29% to 48% through 2025 due to their relatively smaller existing capacities.
However, new entrants in these markets may rely on non-renewable energy sources to power these massive data centres, introducing new carbon transition risks. This reliance does not bode well for a region that still depends heavily on fossil fuels like coal, gas, and diesel for its energy needs.
While some nations might consider switching to relatively cleaner power sources such as natural gas, climate activists argue that this is not an ideal solution. Even natural gas contributes to emissions and can perpetuate reliance on fossil fuels.
So, what can be done to mitigate the emissions driven by data centres?
Some countries, including Australia and Singapore, have set guidelines that new data centre capacity must meet stringent energy efficiency standards. Singapore, for instance, lifted its moratorium on data centres in January 2022 but specified that data centres within its borders must adhere to energy efficiency guidelines, likely leading to a higher long-term demand for renewable energy.
Although the pace of data localisation varies from country to country, it is expected that many nations in the region will follow Singapore’s lead. However, the intermittent nature of renewable energy poses challenges for data centres, which require a constant, reliable energy supply. Additionally, power grids in many parts of the Asia-Pacific region are not yet fully capable of integrating large amounts of renewable energy.
Despite these challenges, innovative solutions are emerging, such as energy storage technologies for renewables. Governments can also invest in hybrid energy solutions that combine renewable energy with fossil fuel power and modernize their power grids to handle the increased load.
The Asia-Pacific region, blessed with abundant sunshine, wind, and long coastlines, holds tremendous potential for generating renewable energy. Countries like India, China, Japan, and Australia have been consistently expanding their renewable energy capacity through policies aimed at reducing carbon emissions.
According to Carlos Torres Diaz, head of gas and power markets research at Rystad Energy, several countries in the region are well-positioned to integrate more renewable energy sources. China, for instance, is expanding its solar and wind power capacity, which is expected to start displacing some coal power generation. Meanwhile, India’s reliance on coal power is likely to continue in the short term as power demand outpaces renewable energy generation.
Diaz emphasizes the need for countries to set clear renewable energy capacity targets and establish the right incentives for developers to ensure that projects are profitable. Similarly, Vineet Mittal, chairman of India’s renewable energy firm Avaada Group, expressed optimism about the potential for renewables to take on a larger share of the energy demand generated by AI-driven technologies.
While AI holds the promise of transforming daily activities from education to financial services, particularly in remote communities, it is crucial that its growth aligns with climate goals. Otherwise, the solution could become more harmful than the problem it seeks to address.
