Insights and Stories

Southeast Asia is poised to become the fourth-largest economy by 2030¹ , with a growing digital economy driven by significant investments in data centres and energy-intensive industries such as semiconductor manufacturing. Singapore, which offers robust infrastructure, secure energy supply and a stable operating environment, is well-poised to play a pivotal role in supporting the technology transformation led by these industries. Sembcorp, a leading Asian energy player with an established renewables portfolio, is strategically positioned to meet the growing energy demand from this transformation with our comprehensive solutions.

Singapore: An Attractive Hub for High Growth Industries

The rapid growth of digital technologies and cloud computing has fuelled a surge in demand for data centres in Singapore. 

Singapore’s strategic location at the heart of Southeast Asia, combined with its world-class infrastructure and favourable regulatory environment, makes it a coveted destination for data centre investments. Its proximity to major markets, robust fibre optic network and extensive undersea cables, ensures low-latency connectivity and optimal data transfer speeds. The stable political environment and strong diplomatic relations provide a secure and reliable operating landscape. As a neutral and attractive hub, several global data centres have established their presence here. In the next few years, Singapore aims to add at least 300MW of data centre capacity, with 200MW allocated to operators who use green energy options.²

The semiconductor manufacturing industry supports the growth of data centres through its technology innovations. Singapore is a global leader in semiconductor manufacturing, with nine out of the top 15 semiconductor firms already present here, including Micron and Siltronic. Singapore’s government industrial planner, JTC Corporation, is preparing 11% more land in Singapore’s wafer fabrication parks³ in a bid to attract more top semiconductor giants and ride the artificial intelligence wave. 

Growing Demand from Energy-intensive Industries

As Singapore strengthens its position as a global data centre and manufacturing hub, the associated energy challenges become more pressing. Intensive cooling systems are required to maintain optimal server temperatures due to Singapore’s hot and humid climate. As server densities increase due to land constraints, the strain on the power grid intensifies. 

The interconnectedness of data centres and semiconductor manufacturing further exacerbates energy demand. The Energy Market Authority estimates a peak demand of 7GW to 10GW⁴, driven largely by these sectors. 

Diversifying for Security, Decarbonising for Sustainability

Singapore remains heavily reliant on natural gas, which currently accounts for about 95% of its electricity generation. This reliance poses challenges for high growth and energy-intensive industries striving to meet their business needs and sustainability goals.

To meet this pressing demand for energy security and transition, Singapore is exploring avenues to diversify its energy mix. It has doubled its solar power deployment since 2021 to reach over 1GWp in 2023. The nation targets to import up to 4GW of low-carbon electricity from neighbouring countries by 2035, strengthening the regional energy ecosystem. To accelerate decarbonisation efforts, Singapore has outlined a hydrogen strategy to develop a domestic hydrogen ecosystem and plans to tap on hydrogen blends in the natural gas grid to reduce carbon emissions. 

Recognising the challenges posed by rising energy demand, the government has introduced several initiatives to promote energy efficiency and sustainable practices in the data centre industry.

One key initiative is the Green Data Centre Roadmap, which focuses on promoting green energy deployments to minimise the carbon footprint of data centres. The  pilot  Data Centre – Call for Application exercise forms part of Singapore’s broader efforts to encourage the deployment of lower-carbon data centres, ensuring that the country's digital infrastructure remains competitive while contributing to global sustainability goals.

Sembcorp: The Trusted Partner in Singapore’s Transition Story

In this evolving landscape, Sembcorp is uniquely positioned to meet Singapore’s growing energy demands. As the largest renewables player in Singapore contributing to over half of the nation’s solar energy target, Sembcorp offers a comprehensive suite of energy solutions that include both natural gas and renewable energy options. This dual capability provides companies with the flexibility to power their operations effectively and sustainably.

Sembcorp’s leadership in natural gas is critical to Singapore’s energy transition. As one of the largest importers of natural gas into Singapore, Sembcorp plays an indispensable role in ensuring energy security and affordability. Natural gas remains a cornerstone of Singapore’s energy strategy, expected to meet more than half of the country’s power generation needs by 2035. Sembcorp’s strong positioning in the natural gas market allows it to offer long-term contracts and decarbonisation solutions to customers.

Through its renewable energy solutions and active partnerships in regional power imports and low-carbon alternatives, Sembcorp is growing its capabilities to provide customers with green energy transition options to meet their sustainability goals. In 2023, Sembcorp received conditional approval to import 1.2GW of renewable power from Vietnam to Singapore and is in discussions to import 1GW of low-carbon electricity from Sarawak. These initiatives are part of the company’s broader strategy to diversify energy sources and support Singapore’s transition to a low-carbon economy.

Sembcorp’s leadership in the energy sector is underscored by its success in securing long-term power purchase agreements with major players such as Equinix, ST Telemedia Global Data Centres, Micron, GSK and Singtel. These agreements reflect the trust in Sembcorp’s ability to deliver reliable and sustainable energy solutions.

Towards A Secure and Responsible Energy Transition

As Singapore’s economy continues to be powered by the fast-growing digital and high-tech manufacturing industries, the need to balance energy security with responsible transition becomes increasingly critical. Natural gas remains an essential fuel source to meet Singapore’s growing energy demands, and Sembcorp plays a vital role in ensuring a reliable and secure supply. Underpinned by its commitment to drive the diversification and decarbonisation of Singapore’s energy supply, Sembcorp will continue to invest in its renewables growth and explore low-carbon solutions, to enable a responsible transition towards a sustainable future.

¹ World Economic Forum: How ASEAN is building trust in its digital economy

² EDB: Singapore to expand data centre capacity by at least one-third, pushes for green energy use

³ CNA: Singapore prepares more land to woo semiconductor giants looking to ride AI wave

⁴ EMA: Request for proposal to build, own and operate new generation capacity