Data center boom expected to help accelerate RE growth

THE rapid expansion of data center capacity in the Philippines is expected to spur renewable energy (RE) development, provided that hubs are strategically located to connect with renewable sources, according to the Institute for Climate and Sustainable Cities (ICSC).

“By co-locating data centers with renewable energy zones, the Philippines can anchor demand where clean power is generated, creating a bankable market for renewable projects, and advancing the national energy transition,” the ICSC said in a report on Monday. 

Philippine data center capacity could hit 1.5 gigawatts by 2028 as more operators set up facilities in the Philippines starting this year, the Department of Information and Communications Technology (DICT) has said.

According to the Manila-based think tank, rising data center demand in the Philippines highlights the need for strategic planning between the energy and digital infrastructure sector.

The scale and energy needs of data centers can overload substations, stress transmission lines, and intensify grid congestion if clustered without adequate planning, it said.

“Strategic integration transforms this growth from a potential source of grid stress into a catalyst for clean power deployment and economic opportunities,” the ICSC said, noting that data centers are likely to expand the digital economy.

“The path forward is clear. The Philippines must move from siloed to synergistic planning, treating data centers as a strategic asset for its grid, not just a load on it. By anchoring this new digital demand to renewable energy zones, the country can secure investment, accelerate its energy transition, and build a resilient, high-value economy fit for the decades ahead.”

It said that data centers can also disrupt existing manufacturing, semiconductor, and industrial operations concentrated in Greater Metro Manila if data center siting is not properly planned.

“For the country’s industrial strategy to succeed, data center growth must not come at the expense of existing sectors. Therefore, proactive site selection and adherence to stringent grid standards are crucial,” it said.

The Philippines has sufficient renewable energy to meet the power requirements of data centers, the ICSC said, adding that rooftop solar and offshore wind energy sources can be tapped to supply their energy needs.

However, the ICSC said that some transmission expansion plans may not be able to accommodate offshore wind development and could lead to stranded capacity if grid upgrades are not fully aligned with expansion.

“Bringing large data center demand to high-RE potential areas could be an opportunity to reduce RE curtailment rates and the need for extensive transmission projects. ICSC recommends co-zoning data centers with renewable energy hubs, mandating green power procurement, and integrating data centers into transmission planning,” it said.

The top data center operators, particularly ST Telemedia Global Data Centres (STT GDC) Philippines and VITRO, Inc. utilize renewable energy to power their data centers. — Ashley Erika O. Jose