Speaker 1: if you're listening to this podcast online or forwarding the
Speaker 1: link to your friends, all that data will be going
Speaker 1: through a building with lots of computer systems in it
Speaker 1: or in other words, data centers, they make our digital
Speaker 1: economy and digital lifestyles possible. But there are also huge
Speaker 1: guzzlers of energy. There's now a big push for green
Speaker 1: data centers and you might be wondering how this will
Speaker 1: affect you.
Speaker 1: I'm Jonathan pierce from the money mine team with five
Speaker 1: things you need to know about green data centers. My
Speaker 1: guest today, Managing director South Asia at Equinix and Daylight
Speaker 1: research analyst at DBS Bank. He may. Let's start with you,
Speaker 1: give us the context to this. Why is sustainability such
Speaker 1: a key challenge for data centers,
Speaker 1: sustainability is not just an issue for data center but
Speaker 1: equally it is a challenge for all of us that
Speaker 1: consume power. Unfortunately, data centers have become the spotlight and
Speaker 1: the central focus on sustainability because of the amount of
Speaker 1: power that we consume in data centers
Speaker 1: during the pandemic. We remain connected to each other to
Speaker 1: the rest of the world. And this was sustained by
Speaker 1: digital connectivity. Statistics are showing that in the last five
Speaker 1: months we have continued to accelerate our digital consumption more
Speaker 1: than we have in the last five years
Speaker 1: because of this is becoming a challenge and a focus
Speaker 1: for data centers. We need to ensure that as we
Speaker 1: grow our digital consumption, we continue to green. Our data centers.
Speaker 1: Data centers are also the cornerstone of everything that we
Speaker 1: do that's digital.
Speaker 1: So sustainability is something that the industry is thinking about carefully.
Speaker 1: But what about us consumers, should we be worrying about
Speaker 1: whether a data center is sustainable or not?
Speaker 1: The men on the street needs to be very concerned
Speaker 1: about the sustainability of data centers because each and every
Speaker 1: one of us doing anything that's online, enjoying lifestyle apps,
Speaker 1: purchasing our groceries, shopping, googling, doing any of social media
Speaker 1: etcetera is all generating massive data that needs to be
Speaker 1: stored and
Speaker 1: Process and computed in our digital infrastructure. Every single photo
Speaker 1: that we snap of the food that we eat is
Speaker 1: storage that is consumed digitally. If this digital infrastructure is
Speaker 1: not sustainable, we are really contributing to the carbon emissions
Speaker 1: that our planet currently is suffering from cop 27 has
Speaker 1: hosted quite clearly that we are heading towards 2.4
Speaker 1: and this process of reversing it downwards is going to
Speaker 1: be a huge challenge. So every man on the street
Speaker 1: needs to play a role in ensuring that they care
Speaker 1: about the sustainability of data centers and they need to
Speaker 1: understand which are the data centers that are playing a
Speaker 1: more pivotal role in ensuring that their data centers are green.
Speaker 1: Let's bring in day live from DBS Bank. Now this
Speaker 1: region is projected to be the fastest growing in the
Speaker 1: world for data centers. So this will be something of
Speaker 1: interest to investors. How can they bring sustainability into the
Speaker 1: picture for
Speaker 2: Singapore reads with a significant exposure to data centers in
Speaker 2: terms of how they can be more sustainable in terms
Speaker 2: of data center. Something that is a very common measure
Speaker 2: for data centers will be what we call the P. U. E.
Speaker 2: Power usage effectiveness. To have a better P. You score,
Speaker 2: Data centers would have to be more power efficient.
Speaker 2: So for example the hardware, the likes of your servers,
Speaker 2: the likes of your cooling system has to be more
Speaker 2: power efficient in terms of P. U. E. That is
Speaker 2: something that that is important for data center operators. That
Speaker 2: is something that I believe the data center operators would
Speaker 2: be looking at improving. And another aspect for sustainability for
Speaker 2: data centers would be in terms of the carbon footprint.
Speaker 2: Data center operators are gradually switching to the use of
Speaker 2: more renewable energy to power their data centers.
Speaker 2: They are also exploring ways on how they can induce
Speaker 2: more renewable energy, how they can improve the efficiency. Many
Speaker 2: of the data center reads or if not all of
Speaker 2: them have actually committed to align themselves to some form
Speaker 2: of sustainability reporting frameworks and they have also set in
Speaker 2: place targets to reduce carbon emissions.
Speaker 1: It's estimated that data centers make up about 1% of
Speaker 1: global electricity demand. So part of the sustainability challenge will
Speaker 1: be in finding alternative sources of energy. Now one of
Speaker 1: these alternatives is hydrogen, but how viable a solution is
Speaker 1: that in the Singapore context,
Speaker 1: hydrogen offers the potential to end our dependence on fossil
Speaker 1: fuels as we work to meet climate goals, fortunately the
Speaker 1: use of alternative sources such as solar, wind, geothermal and
Speaker 1: hydro energy is gaining increased support will buy and we
Speaker 1: continue to also explore all those possibilities. Ethnics is already
Speaker 1: currently piloting hydrogen ready fuel cells in Italy. If successful,
Speaker 1: it will be implemented more broadly across a global network
Speaker 1: based on
Speaker 1: site of specific regional needs and clearly local regulation requirements.
Speaker 1: Hydrogen generation on an industrial scale remains several years away
Speaker 1: from being commercially viable, making it imperative to assess and
Speaker 1: adopt alternatives. Even as global R and D efforts continue
Speaker 1: piloting hydrogen and our data centers in Singapore currently remains
Speaker 1: to challenge storage and transportation issues in a populated, dense
Speaker 1: area need to be resolved.
Speaker 1: And if you're able to resolve these challenges of transportation
Speaker 1: and storage, what kind of savings are we looking at
Speaker 1: the greenhouse gas emission savings that we're looking at? Clearly,
Speaker 1: you know, 100% would be the dream state. However, based
Speaker 1: on the unknowns around hydrogen to begin with. If we
Speaker 1: can hit 80% that would be a key objective. So
Speaker 1: it sounds like sustainability. Makes good business sense. Would you
Speaker 1: agree dale
Speaker 2: when we talk about sustainable data centers best example, would
Speaker 2: be more power efficient assets, for example, in Singapore with
Speaker 2: rising energy costs that we saw in in recent times
Speaker 2: Data center that uses less energy significantly reduces their operating cost.
Speaker 2: This is a form in which data center reits would
Speaker 2: benefit from a more sustainable data center. If you look
Speaker 2: at it from the angle of leasing out this data
Speaker 2: center assets to tenants.
Speaker 2: A lot of these data center tenants are major MNCs
Speaker 2: and they themselves have actually committed to reduce their own
Speaker 2: carbon footprint and emissions when it comes to their operations.
Speaker 2: For a data center that has a more sustainable data
Speaker 2: center data center that has a smaller
Speaker 2: footprint, they would definitely be in a better position to
Speaker 2: attract and retain some of these tenants and potentially even
Speaker 2: command higher rents
Speaker 1: from the investor point of view. Does it make more
Speaker 1: sense to invest in a sustainable data center compared to
Speaker 1: a not so sustainable one.
Speaker 2: In terms of pay off, there are two more direct
Speaker 2: payoffs for investors firstly in terms of operations
Speaker 2: definitely, you know, with a more sustainable, newer, more efficient
Speaker 2: data center, we are looking at long term cost savings
Speaker 2: and operations, especially on the utility cost front. That would
Speaker 2: be the main pay off. The second payoff would be
Speaker 2: increasingly a lot of your M. N. C. A lot
Speaker 2: of end users, they have set their own targets to
Speaker 2: reduce their carbon footprint and emissions.
Speaker 2: With a sustainable, a more green data center facility, the
Speaker 2: landlord would be better able to actually attract more tenants
Speaker 2: to retain their tenants and also at the same time,
Speaker 2: hopefully they can command higher rents for some of these
Speaker 2: better spec data centers as well.
Speaker 2: The short answer is a definite yes, it is definitely
Speaker 2: better to invest in a sustainable dc. But a question
Speaker 2: to actually ask ourselves is what is a sustainable data
Speaker 2: center or one that is less sustainable. I would think
Speaker 2: that a so called less sustainable data center is probably
Speaker 2: one that is slightly older where the hardware where the
Speaker 2: infrastructure is less efficient in terms of the energy consumption,
Speaker 2: they would be less efficient
Speaker 2: but less efficient or slightly older data center may not
Speaker 2: necessarily be a bad investment. It really depends on the
Speaker 2: management of the data center track record and the capabilities
Speaker 2: if they show that or if they have the capability
Speaker 2: to upgrade some of these older properties, it may not
Speaker 2: necessarily be a bad investment in Singapore and construction costs
Speaker 2: have actually gone through the roof in recent times,
Speaker 2: investing in a brand new swanky data center with the
Speaker 2: top specs may be something that is very costly as
Speaker 2: compared to, you know, investing in a slightly older data
Speaker 2: center where you know, management can value add to the property.
Speaker 2: They can actually upgrade the existing equipment and drive more
Speaker 2: value for investors.
Speaker 2: Definitely a sustainable data center is better. But you know,
Speaker 2: if the manager has the track record and capability to
Speaker 2: value add to some of these less sustainable data centers,
Speaker 2: it could actually be a good value proposition as well.
Speaker 1: So green data centers pay off in many ways for businesses.
Speaker 1: They come with a lower cost of operations. There also
Speaker 1: attractive for property investors because they could command a green
Speaker 1: premium for rentals
Speaker 1: with rising awareness of the carbon footprint of data centers.
Speaker 1: The industry is looking into renewable options, but it will
Speaker 1: take time to develop commercially viable alternatives. Plus solutions for
Speaker 1: Singapore will need to take into account the local climate
Speaker 1: and other conditions.
Speaker 1: Now, Singapore has recently lifted a moratorium on the building
Speaker 1: of new data centers. How does that change the outlook
Speaker 1: for the sector in Singapore? Especially given that data centers
Speaker 1: account for around 7% of the island's overall power usage.
Speaker 2: This topic
Speaker 2: on sustainable data centers is looking very exciting here in Singapore.
Speaker 2: In part this was also driven by the moratorium over
Speaker 2: the last three years. The moratorium over the last three
Speaker 2: years has actually so called false data center operators to
Speaker 2: relook how they operate and how they develop data centers.
Speaker 2: There is a urgency to actually convert or to build
Speaker 2: more efficient, more sustainable data centers for example, Capital Data
Speaker 2: center Right now, they are exploring the idea of a
Speaker 2: floating data center park where the data center is built
Speaker 2: in modules on the sea uses seawater to cool the
Speaker 2: data center if successful. You know, I think this is
Speaker 2: something that could change the data center landscape here in Singapore,
Speaker 2: especially given that, you know, we have land constraints,
Speaker 2: this need or the urgency to actually look for more
Speaker 2: sustainable options. The need to actually innovate this would change
Speaker 2: the landscape for Singapore data centers and it would be
Speaker 2: something very interesting to look out for in the coming years.
Speaker 1: Final question, what's at stake if we don't try to
Speaker 1: make data centers more sustainable? So currently digital traffic is
Speaker 1: growing massively. The pandemic has shown to us that being
Speaker 1: digital ready is extremely important.
Speaker 1: There is no guarantee that there is not going to
Speaker 1: be another pandemic. We are using more and more digital
Speaker 1: apps to focus on education, on telemedicine, on genomics research
Speaker 1: and as we do that we need more digital infrastructure
Speaker 1: and hence it is extremely important that we ensure data
Speaker 1: centers are sustainable because if we are in the current
Speaker 1: situation that we are in Singapore with the monetary um
Speaker 1: and the data centers are limited, then our ability to
Speaker 1: thrive in the digital economy is going to be constrained
Speaker 1: and we really don't want to do that because in
Speaker 1: order that sample remains to be a competitive
Speaker 1: hub. We need to ensure that we have data centers
Speaker 1: that allow the optionality of supporting hybrid and multi clouds
Speaker 1: so that we enable this global digital economy right, which
Speaker 1: ensures that we equally attract data that comes into Singapore
Speaker 1: and we also ensure that we have a platform that
Speaker 1: enables these companies to go out to the rest of
Speaker 1: the world
Speaker 1: because of that. It is extremely important that we make
Speaker 1: our data centers more sustainable. And the sector continues to
Speaker 1: focus on this aggressively because it is each and every
Speaker 1: one of our role to ensure that we make the
Speaker 1: planet a future that exists for our Children.
Speaker 1: And that means lots of opportunities ahead as Singapore gets
Speaker 1: set to craft a new landscape for building more sustainable
Speaker 1: data centers. The industry is exploring renewable energy sources including
Speaker 1: hydrogen technology, but it will take time to develop commercially
Speaker 1: viable alternatives. And such solutions will also need to be
Speaker 1: adapted to local environments, including climate and population.
Speaker 1: So plenty of challenges ahead for green data centers, but
Speaker 1: they also already pay off in many ways lower cost
Speaker 1: of operations for businesses and for property investors, they could
Speaker 1: command a green premium for rentals. And those were the
Speaker 1: five things you need to know about green data centers.
Speaker 1: My guest Today leon, managing director, South Asia at the
Speaker 1: clinics and they'll lie research analysts at DBS bank
Speaker 1: catch money mind on C N A and online at
Speaker 1: me Watch sienna dot asia and on youtube.