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Clouds of Uncertainty:
Climate Risks Over Asia's Data Centers

With the rise in data consumption, cloud computing and the adoption of new technologies such as the Internet of
Things (IoT), the data centre market is projected to reach US$517 billion by 2030, registering a CAGR of 10.5% this
decade. Much of this new demand is expected in emerging regions such as Southeast Asia, with capacity projected
to grow at a CAGR of 19.4% between 2021 and 2026.

However, climate change presents challenges to data centre development in Southeast Asia. The increasing
intensities, duration and severities of acute climate-related hazards such as rainfall-induced floods and
typhoons (tropical cyclones) may cause equipment damage and facility disruption, while heatwaves may
increase cooling demand and in some cases cause systems to fail, leading to temporary shutdowns. Such
‘digital downtimes’ can be costly: an analysis by asset management firm Impax and the UK Centre for
Greening Finance and Investment estimated that extreme heat may result in an expected average revenue
loss of around US$30 million per year by 2050 across the data centres of two operators in Asia.

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