Experts gather to discuss China & SEA data centre
On March 5th, professionals from more than 200 companies in the cloud and data centre industry in China and Southeast Asia participated in an online conference organized by W.Media.
Titled “Two-Way Interpretation: The Opportunities and Challenges of the Development of the Data Center Industry in China and Southeast Asia”, the conference provided a platform for leaders to discuss outlooks of China and Southeast Asia data centre.
Featured industry forerunners include LEED Data Centers Advisory (China) Committee, China Digital Intelligence Information Technology Research Institute, and KPMG, discussed the development, policies, opportunities and challenges of the data centre industry.
The fast-growing China market
China’s data centres have grown rapidly in recent years, with more room for growth in the future. In 2019, the scale of racks in use reached 12,600 megawatts, and the planned racks under construction reached 14,640 megawatts, with 3.2 million server shipments, said Danny Cheng, LEED Data Centers Advisory (China) Committee; Banyano Data Center Consulting Inc.
Widespread digital transformation is also driving enterprises to the clouds. Aided by the pandemic, China’s cloud spending in the third quarter of 2020 increased by 65%, reaching US$5 billion, Mr Cheng added.
According to Li Wei, general manager of the Corporate Development and Investment Department of Sinnet, other growth drivers of China’s data centre industry include loose monetary policies and restrictions on investing in traditional real estates. As such, a substantial amount of funding will be channelled into the data centre industry, which has some real estate attribute but does not warrant state restrictions.
Greener and more modular
Mr Cheng cited a survey in 2019, which shows that China’s data centre power consumption in 2018 reached 60 billion kWh, with a high PUE index.
Although the electricity consumption of data centres only accounts for about 1% of the national electricity consumption, the geographical concentration of data centres amplifies the impact on local electricity consumption.
This is also the reason why Beijing restricts data centres. In 2018, Beijing’s 186,000 cabinets consumed 9.8 billion kilowatt-hours of electricity, which is 9% of the city’s electricity consumption and has exceeded 10% in the past two years.
To meet the local government’s requirements for PUE indicators and energy-saving, liquid-cooled servers, especially immersion and cold-plate liquid cooling, are also being scaled up, Mr Chang added.
Last year, the Chinese government pledged to peak carbon emissions in 2030 and achieve carbon neutrality in 2060, shifting the industry’s focus from PUE indicators to carbon neutrality.
The country first introduced a quota system and green certificate trading mechanism in 2016 and released renewable energy power consumption implementation plans in multiple cities in July 2020 to substantially improve the implementation of the quota system.
The growing maturity of energy policy means that the industry has to make adjustments to respond to policy changes, and particularly by shifting the focus to carbon neutrality, Mr Cheng opined.
He also expected to see more prefabricated modular data centres, which facilitate flexible and fast delivery, as tech giants Tencent and Huawei’s modular buildings show.
The catch: talent crunch
Operation and maintenance talents often take time to cultivate. China’s new infrastructure is growing too rapidly resulting in a shortage of operation and maintenance talents to maintain the growth.
Restricted by various conditions, China’s data centre foray into automation is less than ideal. The existing robots are unable to substitute humans in most cases, which is not likely to be improved significantly soon.
However, “connected worker” may be the solution, Mr Cheng said. This concept aims to equip operation and maintenance staff with smarter equipment and more on-site operation and maintenance support to improve efficiency and reduce errors.
More conducive national and regional policies
In recent years, China’s policies focus on improving the data centre market access, optimising the location, long-term planning, design according to requirements, and construction according to standards, ultimately forming a comprehensive pattern of advanced technology and coordinated development.
China’s new negative lists enumerate the industries where foreign investment will either be prohibited or restricted. This demonstrates that the national policies have become friendlier for foreign players, raised by experts such as Zhang Yonghai, MD of PDG China, in the roundtable discussion on the next ten years of China’s data centre industry.
Generally speaking, the national-level policy is very comprehensive, which has not only promoted the rapid development of data centres in the past ten years but also guided the future development direction, said Mr Zhang.
Provinces and cities also adapt the national policies to local circumstances. In January 2021, Beijing and Shanghai released policy documents for the overall development of data centres.
Similarly, Guangdong Province proposed a “dual-core nine-centre” data centre layout, forming two low-latency core areas in Guangzhou and Shenzhen, and nine cluster areas in the province. The average shelf rate of provincial data centres is 65%, and the design average PUE is less than 1.30.
SEA: four main growth drivers
By 2024, the scale of data centres in the Asia-Pacific region is expected to reach 28 billion U.S. dollars, achieving a compound annual growth rate of 12.2% over five years, and the growth rate far exceeds that of North America, Europe, the Middle East and Africa. Southeast Asia is expected to reach 3.5 billion U.S. dollars, achieving a compound annual growth rate of 12.9%, research by Cushman & Wakefield shows.
Among them, Singapore, Hong Kong, Tokyo and Sydney are the first echelon, leading the industry growth. Jakarta, Mumbai, Chennai, Beijing, Shanghai and Seoul are close behind. Thailand, Vietnam, Malaysia and other ASEAN countries have also entered the ranks of emerging markets.
It is worth noting that the global growth of edge data centres and hyperscale data centres is particularly rapid, and is expected to achieve compound annual growth rates of 21% and 22%, respectively.
For Darren Yong, KPMG Asia Pacific Head of Client and Market Development and Head of Technology, Media and Telecom, the rapid growth of data centres in Southeast Asia can be attributed to four major driving forces:
One of the first to bear the brunt is digitization. With the help of the epidemic, business and personal activities have moved online, and more data has been generated from this, driving the growth of data centres.
The second is data centralization. With the business transformation of various industries such as banking, insurance, medical care, energy, and home furnishing, with a large amount of user data, data centralization has become a trend, and terminal data is increasingly gathered in the hands of the top players in several major data centres.
Thirdly, Industry 4.0, including smart cities, smart homes, smart campuses and smart production will create demand for more data storage and related services.
Finally, 5G and the Internet of Things, which will especially promote the growth of edge data centres, and put forward higher demand for large-scale data storage.
In the next three to five years, mobile applications, including e-commerce, e-sports and other entertainment features will feature prominently, said Edward Tay, CEO of Sistema Asia Capital.
Singapore, Malaysia and other local governments are also launching a large number of supporting facilities to encourage digital transformation of local enterprises, Tay opined.