Apac data centre boom straining power grids; reliability key to site selection: report 

[SINGAPORE] Surging demand in the Asia-Pacific for data centres and other energy-intensive sectors is starting to weigh on power systems across the region, affecting grid reliability and increasing costs.

Reliable electricity supply is now a key factor in decisions on where to site and build facilities for data centres, semiconductor and electrical vehicle battery manufacturing, as well as pharmaceutical and life sciences, according to a report released on Thursday (Jun 12) by construction consultancy Linesight.

“In the current landscape, energy has become more than just a utility,” Linesight said. “It is a strategic consideration in site selection and a critical factor in enabling future development, particularly for mission-critical sectors.”

In 2025, Apac is predicted to account for half of the world’s electricity consumption, with demand growing faster than the global average, the consultancy said. It noted that advanced economies – such as Singapore, Japan, Australia and South Korea – are now experiencing more strain on their power grids, putting pressure on ageing assets.

In Singapore, for example, significant portions of the electricity network were built between the 1980s and 2000s. This calls for design and planning upgrades to meet evolving energy needs, said Linesight.

More than half of Australia’s thermal power plants are over 40 years old, causing grid instability and sharp price increases, it added.

Emerging economies, such as India and much of South-east Asia, suffer from reliability gaps amid rapidly expanding demand, and are still reliant on fossil fuels. This is despite strong investment momentum over the last decade.

Japan, South Korea and Taiwan are also highly dependent on importing energy due to limited domestic resources, said Linesight.

“This structural reliance on foreign energy sources heightens exposure to global market volatility, and reinforces the need for resilient, diversified and digitally enabled power systems.”

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Data centres alone consumed an estimated 415 terawatt hours (TWh) of electricity last year – around 1.5 per cent of global electricity demand. The adoption of artificial intelligence is expected to push that demand up by 160 per cent. The semiconductor industry consumed 149 TWh of electricity in 2021, and is projected to grow nearly 60 per cent to 237 TWh by 2030.

Many countries in Apac are now looking to expand their renewable energy capacities to meet this surging demand and hit decarbonisation targets, said Linesight.

Garvan Barry, the consultancy’s regional director for North Asia, said: “Though fossil fuels dominate, renewables are scaling fast – particularly wind, solar and geothermal – offering new opportunities for clean power sourcing and alignment with long-term sustainability goals.”

Both emerging and advanced economies are also making significant investments to upgrade their power grids, it said. This makes up for Apac’s 14 per cent decline in power grid infrastructure investment to US$61 billion in 2024, from US$71 billion in 2016 – which Linesight attributed to reliance on public funding, challenges in attracting private sector investments and complex regulatory frameworks.