Why everyone wants in on Singapore's DC-CFA2
Singapore's 200MW offering seems small. The strategy behind it isn't.
From the outside, DC-CFA2 with just 200MW of data centre capacity offered seems barely worthy of press. Here's why everyone wants in.
Singapore is closely watched for good reason: extremely low data centre vacancy, a mature and significant data centre hub, and a huge connectivity lead with over two dozen active subsea cables. Despite massive growth by regional rivals over the last 24 months, Singapore maintains its position as a key market.
An extremely high bar
What do the requirements in DC-CFA2 tell us? Smaller players without substantial financial clout and operators without data centres in at least one or two nearby countries won't stand a chance.
Part of the reason the bar is so high is due to its requirement for at least 50% green energy use. This is a lot, and as far as I am aware, has no precedent as a national policy anywhere else without an abundance of renewables. The requirement will substantially increase costs in what is already one of the priciest data centre markets in the world.
Does it even make sense? Yes, but only if one looks beyond data centres and at what Singapore is trying to do as a nation.
A challenge not unique to Singapore
Consider how nations are running up against resource constraints, whether around water in Johor or electricity in parts of Thailand. Perhaps Singapore is merely thinking three steps ahead. Because at its core, this is a game of resources. And in this case, that means renewables.
While Singapore, given its small size, is running up against resource constraints much earlier than others, it is a challenge that all nations will eventually face. As Senior Minister of State Dr Janil Puthucheary said at the launch of Google's fourth data centre in Singapore last year: "This challenge [of sustainability] is not unique to Singapore; eventually, all of us, wherever we are in the world, are going to be faced with these constraints."
Ample room for growth
The region has incredible room for growth. Even after discounting AI training, Asia needs many more data centres given its population and digitalisation. In the worst case, organic demand in Asia could be our backstop against a global crash. In the best case, the growth in other markets will ripple out to us soon.
But supporting more data centres ultimately boils down to energy. And in a world where we actually care about the future of the planet, that means renewables. Singapore simply appears to have recognised this earlier than most.
Read this piece in its entirety on Substack here: go.clearlytech.co/BIz2
