Green data centres: Singapore companies call for new inter-agency body, innovative financing
Other suggestions include setting up a central agency to procure green energy, similar to Singapore GasCo
[SINGAPORE] A new inter-agency body, a centralised clean energy buyer and innovative financing models – these are among the recommendations by two industry bodies in Singapore to promote green power adoption by data centres here.
There is currently a lack of transparency in clean procurement for data centres, said the Sustainable Energy Association of Singapore (Seas) and tech association SGTech in a position paper released on Tuesday (Oct 28).
“The potential opacity around key areas such as double counting, project evaluation methodologies, decision-making criteria and vendor selection can create uncertainty for both purchaser and supplier,” stated the paper.
It was launched at the Asia Clean Energy Summit at Sands Expo and Convention Centre, part of the annual Singapore International Energy Week.
Singapore has positioned itself as a data centre hub in the region, with over 1.4 gigawatts in capacity. On Monday, the Republic announced plans to build a data centre park on Jurong Island with up to 700 megawatts in capacity.
That said, it has emphasised the need for data centres, which are energy-intensive, to tap clean power. Singapore aims to hit net-zero emissions by 2050.
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Partnerships between the public and private sectors are crucial for Singapore to align data centre growth with its climate goals, noted Seas and SGTech in the paper.
However, energy procurement mechanisms have not evolved to address the specific needs of low-carbon sources and the industry lacks expertise on how to structure power purchase agreements (PPAs) for these sources, they noted.
It is also challenging for data centre operators to secure early access to green energy imported into Singapore from neighbouring countries.
Many of these projects – part of the broader Asean Power Grid – are still at an early stage. Therefore, buyers are exposed to risks such as project delays and regulatory changes.
However, this challenge is also a “crucial opportunity”, the associations said.
“Instead of discouraging early commitments, this is the time to co-develop pathways for risk-sharing between public and private sectors,” they said, noting that this would build market confidence in Singapore’s clean energy imports.
Policy recommendations
The paper sets out five policy recommendations, first among which is “clear and coordinated” government leadership.
This includes having flexible regulatory frameworks and forming an inter-agency body that serves as a “one-stop shop” overseeing the energy transition.
This body would streamline coordination among agencies with overlapping jurisdictions, such as the Energy Market Authority, the Infocomm Media Development Authority and industrial landlord JTC.
“This body would mitigate bureaucratic bottlenecks, conflicting requirements and lengthy approval processes,” said Seas and SGTech.
The second recommendation is to streamline energy procurement and standardise PPAs for clean energy.
A central agency could be set up to aggregate green energy, similar to Singapore GasCo, which was recently set up to centralise the Republic’s gas purchases. This is to help smaller players overcome cost barriers and achieve economies of scale.
However, the central agency should be a “complementary pathway to support, not replace, the growing private market for direct and virtual PPAs”, the paper added.
The associations called on Singapore to partner the industry to co-develop risk-sharing mechanisms, including “targeted policy backstops” for risks such as major regulatory changes or force majeure events.
The third recommendation is for innovative financing and cost reduction strategies, such as public-private partnerships.
The associations asked the government to provide direct financial support for projects with high upfront capital needs or nascent technologies, citing that Singapore’s S$10 billion Future Energy Fund could play a role.
The fourth recommendation was for deeper industry collaboration, such as by setting up a “Singapore PPA Centre of Excellence” that promotes education on PPAs.
Finally, Seas and SGTech called on Singapore to strengthen its energy supply and infrastructure, with more efforts to address technical challenges in transmission and grid stability, as well as diversifying the energy mix.
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