A laser focus attention of the Department of Energy (DOE) for immediate 500-megawatt power capacity addition is being sought by prospective investors in data centers and the hyperscale computing firms if the Philippines would not want to waste multi-billion dollar worth of investments from the information and communication technology (ICT) sector.
The ICT industry players sounded off that if the energy department cannot commit on that power capacity ramping up on speedy pace, the foreign investors may turn their attention away from the Philippines and may just opt to relocate and inject their investment-dollars in neighboring countries – especially those that have reliable and cost-competitive electricity supply.
In an interview at the sidelines of the recently concluded Powertrends, ePLDT Chief Data Center Officer Gary Ignacio stated that “power demand is going to increase exponentially. So overall, energy is a foundation for progress – more so for digital transformation, because it needs a lot of energy.”
Based on industry estimates, the electricity demand growth that the ICT sector will specifically need through 2026 will hover at 300 to 500MW of reliable baseload capacity on top of the conventional capacity shoring up of 600 to 800MW required to underpin the economic growth aspirations of the country.
“We’re at the growth stage, because if we look at total capacity, we’re still at sub-100 to maybe a little over 100MW. Clearly, that’s just for commercial data centers, not even counting yet the smaller ones that each company operates. So in three years, easily that can grow to 300MW to 500MW if they (targeted investments) happen - because again these hyperscalers are trying to check if the Philippines is going to be the best destination,” he stressed.
Ignacio added “whether that is industrial or digital transformation, they will require hefty amount of energy, so it has to be at the top of the agenda - particularly if we want to realize the very bullish foresight of a lot of spectators, the likes of Google, that are around saying -- it’s really for us to make things happen.”
He conveyed that many foreign firms are keeping a close watch on the Philippines – carefully assessing if this is the viable investment site that can host them on operating full blast cloud regions and availability zones.
Hyperscale computing firms refer to mammoth cloud service providers – primarily catering to the computing and data storage needs of enterprises and businesses; and these are the likes of Google, Meta/Facebook, Microsoft, Amazon Web Services, Huawei, SAP, Equinix, Oracle, IBM and Alibaba.
Ignacio further noted as the critical decision processes are carried out by Philippine leaders, “our neighboring countries are aggressively pursuing similar steps because they also want to be the host – especially so since the hyperscalers are getting away from Singapore because of the moratorium. Singapore has moratorium on data centers because they’ve already reached the limit; they have a quota; so they (hyperscalers/data center investors) are scrambling for alternative sites.”
The ePLDT executive narrated that other relevant government agencies – primarily the Department of Trade and Industry (DTI) as well as the Department of Information and Communications Technology (DICT) have already opened pathway for far-reaching discussions on addressing the policy as well as infrastructure needs for the planned data centers of hyperscalers to thrive in the country.
The industry players indicated though that the DOE doors remain to be on a tight lid for prospective investors to knock on, hence, the grueling issue of power supply is one major concern that has been impeding investment decisions for many foreign companies wanting to relocate their operations in the Philippines.
According to Ignacio, “there are discussions with the public sector, we just want to make sure that it is carried over in this administration. At least with DICT and DTI – that’s actively ongoing with Secretary (Federico) Pascual; and with DICT Secretary (Ivan John) Uy.”
He asserted “policies are important because that’s part of the criteria how the hyperscalers value the country – meaning, they look at the incentives scheme, they look at the data privacy scheme; they look at the ease of doing business, taxes – all of these things are important to them; and also sustainability in their energy use.”
The development gestation period for base load power plants typically takes 4-5 years, entailing then that the Philippines may have already been delayed on this actionable item. And while solar capacities could be easier to install, the intermittent nature of their generation is not the kind of power supply reliability that the hyperscalers have been batting for at this stage; although they aim for sustainability in the years ahead.