Will gas fuel Asia’s data centre boom?

Rapid growth in cloud services, digitalisation, and 5G helped total operational data centre capacity in Asia reach 10.6 gigawatts (GW) in 2023. AI will stimulate significant additional demand – both for data centres and for reliable 24/7 electricity generation to keep them operational. Notably, proliferating power-intensive data centres could boost gas-to-power demand. So, what does that mean for local gas markets?

To estimate the potential increase in gas demand resulting from the growth of data centers, we conducted an analysis of four key Asian countries. These countries heavily rely on gas-fired generation, and we calculated their requirements under three possible scenarios. Fill in the form to download a complimentary extract from our ‘Gas fuels Asia’s data centre boom’ report or read on for a brief summary.

Japan and South Korea: Gas supports renewables in near term as nuclear faces delays

In addition to data centres, both South Korea and Japan have a prominent role in the semiconductor value chain, which will also see a surge in demand to support the growth of AI. Based on assumptions from governments and local industry bodies, we estimate that combined power demand from data centres and semiconductor manufacture could account for around 4-5% of total power consumption by 2030, compared to a 0.5% share today.

Gas-fired generation and renewable energy will primarily meet the additional power demand for data centres by 2030. Nuclear restart and new capacity will take time, while increasing coal risks undermining net zero ambitions. Assuming gas will account for 40% of requirements, total gas demand for data centres and semiconductor manufacturing across the two countries will claim around 3% of the regional LNG demand by 2030.

Singapore: Power grid limitations likely to limit further data centre growth

Singapore has been a popular location for data centres since the early 2000s, thanks to its strategic location, political stability, and advanced digital infrastructure. Concerns about the environmental impact associated with data centers resulted in a moratorium on the construction of new data centers in 2019. The moratorium was lifted three years later, allowing construction to resume in 2023.

In May 2024, the Singaporean government introduced a comprehensive Green Data Centre Roadmap to guide the industry toward sustainability, resource efficiency, and innovative cooling solutions. However, we expect gas and LNG to dominate the country’s fuel mix through 2030 – including its role in meeting the lion’s share of data centre power demand despite the roadmap’s focus on greener energy sources. Power grid capacity could become a bottleneck in this scenario.

Given the challenges, we expect future data centre market growth in Singapore to be constrained, and as such we expect the incremental gas demand due to data centres will be limited to 0.22 mmtpa in our base scenario – all of which will likely be in the form of LNG. The neighbouring Johor region of Malaysia will rise in importance as a regional data centre hub, thanks to its cheaper land, better water and energy availability, and supportive policies.

Thailand: Digital infrastructure development fuels a data centre boom

Thanks to the expansion and enhancement of its digital infrastructure, Thailand is emerging as a major player in the ASEAN market. The Thai government’s Thailand 4.0 initiative is catalysing substantial investments in data infrastructure, with major investors including AWS, Microsoft, Google, Huawei, ST Telemedia and NTT.

Natural gas dominates the country’s power generation mix, providing 68% of electricity in 2023. While there is a push towards renewables, we expect reliance on gas to increase to provide data centres with a source of continuous, dependable energy. Our projections forecast data centres in Thailand will account for around 2.5% of total power demand by 2030. Assuming gas-fired generation meets 66% of this demand, that will equate to an extra 0.5 mmtpa of gas usage. Given the challenges in domestic supply and the decrease in piped imports from Myanmar, the additional demand will mainly be fulfilled by LNG.

Don’t forget to fill out the form at the top of the page to download a complimentary extract from this report. This explores the potential for data centre growth in Asia in more detail and includes estimates of resulting gas and LNG demand under high, medium and low demand scenarios for these four key countries.