Demand for Data centers a boon for PH, BMI research says

Growing demand for data centers might spur new power projects in the Philippines, which lags in Southeast Asia in terms of data centers as electricity supply remains a major issue.

Still, the Philippines has strong potential as a destination for these power-hungry facilities, thanks to its geographical advantage, according to BMI Country Risk & Industry Research.

For instance, the archipelago is considered as a gateway —a landing site—that facilitates data traffic via fiber optic cables that originate from across the Pacific to the rest of Southeast Asia.

A data center houses computer servers and related systems that serve as a centralized location for processing, storing and distributing data.

These facilities are important for IT operations, and many are geared for cutting edge technologies like artificial intelligence (AI).

“While the Philippines lags in terms of data center fundamentals, perhaps the potential for this market involves closing the gap between itself and the leading markets in emerging Southeast Asia,” the research unit of Fitch Solutions said.

In Southeast Asia, Singapore leads in terms of operational data centers, followed by Malaysia and Indonesia. However, the latter two outpace Singapore in terms of planned facilities in the pipeline.

In the runner-up group, the Philippines is behind Thailand and Vietnam in terms of data centers that are already online and still under construction.

“Data center facilities within this market [the Philippines] capitalize on both enterprise and hyperscale opportunities, with developers such as STT and ePLDT Vitro having a presence within this market,” BMI said.

“Because PPAs [power purchase agreements] and renewable matching commitments are becoming integral to data center firms’ operating models, we believe that future construction and facility delivery be planned in tandem with power projects,” it added.

BMI noted that increased demand for cloud computing and the proliferation of use-cases for AI means there is a growing number of power firms looking to bid for contracts to supply energy to new data centers.