Indonesia is one of the most prospective green data center markets in the Asia Pacific. The country has a population of more than 250 million people and is among the fastest-growing economies in the world.
The need for data center facilities to support the fast-paced information technology sector and the increasing demand for outsourcing services will drive the demand for green data center facilities in Indonesia.
As the world increasingly relies on data center services, many organizations are looking for environmentally friendly alternatives to traditional data center options.
This has led to a surge of interest in green data center designs. The concept is relatively new, but the potential benefits are undeniable. This is especially true for people and organizations operating in tropical climates, where maintaining a good operating environment can be very challenging.
Indonesia has the Most Prospective Green Data Center Market
One region that has received a lot of attention from green data center operators in Indonesia. The country’s population growth and rising economic prosperity have contributed to an explosion in demand for digital services, which means an increasing number of companies now need reliable access to high-capacity network resources at all hours of the day.
These firms stand to benefit significantly from green data centers, which are increasingly being deployed to meet these needs.
Indonesia’s Green Data Center Market is expected to witness considerable growth by the end of 2022. The increasing demand for efficient and cost-effective data center solutions across the country has propelled the market.
Notable players in the market that offer comprehensive data center infrastructure also present immense opportunities for this sector.
Factors driving the prospective data center market in Indonesia
The growth of the data center market in Indonesia is driven by increasing demand for data analysis, online streaming, and cloud computing. The rapid growth of the Internet and the emergence of the digital economy will drive the market for data center services in Indonesia over the forecast period.
Factors such as a significant increase in cloud computing, the growing popularity of eSports, increased adoption of cloud-based applications, growing demand for mobile devices, and a shift towards online shopping are also driving the market for data center services in Indonesia.
Moreover, government initiatives such as the Digital Indonesia initiative, National Cybersecurity Strategy (NCS), National eHealth Strategic Plan (NESP), and National e-Government Strategic Plan (NEGSP) are expected to boost the growth of the data center market in Indonesia.
Massive ICT Infrastructure Development
Indonesia has experienced unprecedented growth in Information and Communication Technology (ICT) infrastructure development in the last few years.
The progress of ICT infrastructure has been supported by some factors, such as government initiatives to improve telecommunication services and increase internet accessibility; strong demand for fast and reliable broadband connectivity; a significant increase in internet penetration rate in the country; and increased government support to promote e-education, e-government, e-health services, and e-commerce.
Indonesia’s Growing Internet User Community
Indonesia, with a population of 260 million people, has the 4th largest internet user in the world after the United States. There are 210 million internet users in Indonesia, from Sabang to Merauke.
Apart from the availability of ICT infrastructure, the COVID-19 pandemic has also encouraged people in Indonesia to be more active in using the Internet.
Based on research conducted by HootSuite, most internet traffic comes from mobile phones (70%) and computers 30%.
Google has the highest internet traffic in Indonesia, with 1.42 billion times visited by 99 million internet users in Indonesia in 2021.
The data invites us to consider how much data center capacity is needed in Indonesia. If Google in Indonesia requires a total of 1.42 billion x 1 GB, how much data center area is necessary for computing and data storage?
Yes, you are right. Indonesia will need more data centers than now. This means that there will always be cooperation between data centers in Indonesia and between countries.
Opportunities for Green Data Centers in Indonesia
Globally, the data center industry contributes as much as 2% of total carbon emissions. The leaders agreed to lower the data center’s carbon footprint. One is through the Net-Zer Pact, which aims to reduce carbon emissions by 50% in 2030 and more than 100% in 2050 (Net-Zero Year).
Various conditions have been set and distributed through green certification from The Green Grid and The Uptime Institute.
Data Centers in Indonesia must improve in 2022 to achieve various compliances. This change also opens up opportunities for constructing a new Green Data Center in Indonesia.
If you look at what happened in Singapore after the moratorium on the temporary suspension of the construction of new data centers and the presence of leading data center players such as Amazon, Azure, and Google, the opportunities for Green Data Centers are increasingly evident.
Green Data Center Demand in Indonesia
How big the demand for green data centers in Indonesia has been proven to be quite prospective. The growth of the data center market in Indonesia is 5.46%.
Arizton Advisory and Intelligence state that the Indonesia Data Center Market will witness a $ 42.4 billion investment by 2027. With 66 data centers spread across 14 cities and the addition of 10 new data centers in Indonesia.
Green data centers are more strategic than non-green data centers because users will prefer data centers that are efficient and environmentally friendly.
Especially data center users in North America and Western Europe are very concerned about the sustainability factor in choosing a data center for their business colocation.
Likewise, cloud provider companies need a green data center to be able to continue to follow compliance. Moreover, Over The Top Player, green IT has become an “obligation” for them.
Energy scarcity in several countries has also opened up opportunities for Indonesia’s colocation and disaster recovery center (DRC) market.
Business competition in the digital era, and the increase in people’s daily activities, regulations, and policies, are what directly shape the market in Indonesia.
Challenges and solutions
By 2020, Indonesia’s IT-BPM industry will likely have a market worth USD 26.3 billion. This growth will be driven by several critical factors, including the rise of small- and medium-sized enterprises (SMEs) and large corporations, increasing internet penetration, improving ICT development and availability, and increasing government spending on infrastructure developments.
Furthermore, Indonesia’s economic growth, coupled with its young population (about 40% of the country’s population is under the age of 15), has created opportunities for businesses seeking to grow their operations in this vibrant economy.
However, despite these promising market trends and opportunities, Indonesia’s IT sector faces critical challenges that could impede its full potential.
The biggest challenge the green data center faces is the limited availability of renewable energy due to the need for an appropriate incentive policy. For example, there is an excellent potential for solar power in Indonesia, where approximately 300 days of sunshine per year.
However, due to a lack of financial incentives, large-scale deployment of solar panels is rare. The feed-in tariff (FIT) is only 0,098 USD/kWh (lowest in Southeast Asia).
FITs in other countries are typically between 0.20 – 0.40 USD/kWh. This has been a significant barrier to deploying renewable energy and has led to higher costs for companies to deploy renewable energy compared to conventional power sources.
Moreover, many companies need land and grid access for solar power plant deployment at their premises, which limits their options for enabling them to operate more sustainably.
In addition, the lack of regulation concerning grid stability with high penetration of renewables prevents businesses from investing in clean energy assets such as solar parks and wind farms. Meanwhile, investment in constructing a data center in the city center is becoming increasingly expensive.
As we know, currently, the majority of Indonesian data centers receive electricity from PLN (State Electricity Company) sourced from coal and fuel generators in North Jakarta.
Using natural gas for data center power plants in Indonesia has received a commitment from PLN. This can reduce the data center’s carbon footprint by up to 50% and is more cost-efficient.
The design of the data center and the infrastructure used can also reduce energy use. Meanwhile, solar panels and rooftop wind turbines can source electrical energy for lighting and office equipment in the data center.
This means a green data center must have ample enough battery storage space. Thus, constructing a green data center requires more land and buildings than conventional data centers.
Fortunately, the GreenexDC holding has several great locations in Jakarta, so one of the biggest challenges has been overcome.
Indonesia is one of the most attractive markets in APAC mentioned as underline with strong players, good infrastructure, matured education system, and good human capital. Indonesia is also an excellent place to develop green data centers.
The green, sustainable data center market is heating up in Indonesia and could be worth billions as demand continues to rise. Moreover, many players have entered the ring to take advantage of this increasingly valuable market.
Those already in it are vying for dominance, along with new entrants keen on profiting from the growth of this market. It will be a tight race to see who emerges victorious from this highly competitive landscape.
Indonesia’s green data center market presents opportunities for many local and international companies to develop infrastructure and provide services to existing data centers or build new ones.
In addition, some of these companies may work together as they strive to deliver green IT services to various organizations.