Data center boom could push power prices higher

The growing data center sector in the Philippines may further strain Filipinos’ electricity supply if the government fails to implement policies to arrest potential price shocks, according to the Philippine Energy Efficiency Alliance (PE2).

The non-profit said the country is not only threatened by global supply disruptions, but also by the impacts of data centers’ massive power demand on local electricity rates.

Citing data from the International Energy Agency (IEA), PE2 said data centers around the world have been growing 70 percent annually.

“Data centers are mushrooming almost everywhere, growing in size (especially the hyperscalers), and growing in energy intensity (instead of growing in energy efficiency),” PE2 president Alexander Ablaza said on Thursday.

The government has been positioning the Philippines as a data center hub. It has designated a 1,620-hectare site in New Clark City in Capas, Tarlac as the proposed location of an AI and advanced manufacturing hub under Pax Silica.

“The clustering of data centers (i.e., containing them in the same industrial park) poses a major threat to the affordability of electricity prices as they quickly demand new grid capacity upgrades. Up to 30 percent of local grid capacity can be required by data centers,” Ablaza said.

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“Government policy, if done early enough, can mitigate the impacts of DC market growth on the grid,” he added.

Ablaza said that the Department of Energy can require clustered data centers to deploy or build their own generation and storage network to not compromise electricity meant for households and other businesses.