Data centers raise concerns for energy-burdened households

By Guinevere Latoza

Philippine Center for Investigative Journalism

In a low-income community in the Manila suburb of Fairview, a large rectangular structure is rising near a busy highway clogged with vehicles, commuters, and commerce. Few passersby realize that this building is one of four data centers that will be built in Fairview. Together, they will draw up to 124 megawatts (MW) of electricity that will be used to power tens of thousands of data servers. That’s enough energy to electrify all five of the country’s poorest provinces .

The Fairview data center campus is a joint venture between Globe Telecom, one of the largest telecommunications companies in the country, Singapore-owned ST Telemedia, and Ayala Corporation, a Filipino-owned investment conglomerate. The joint venture already operates two other data centers in Manila, one in nearby Cavite province, and another in the southern city of Davao.

The data center business is booming in the Philippines, which has over 90 million internet users who are online an average of nearly nine hours a day. The country’s thriving outsourcing sector, which accounts for nearly 10 percent of GDP, depends heavily on digital infrastructure.

Since 2022, companies have been rushing to build data centers to power internet use and drive the country’s digital and AI transformation. The Fairview campus and others like it will service “hyperscalers”—large technology firms that provide cloud computing services like Amazon Web Services and the Chinese company Tencent. These hyperscalers are expanding their Philippine operations, capitalizing on undersea cables that transmit data across the Pacific. The data center campuses will also host co-location services for companies that need to rent data storage facilities.

Regulators, however, are still figuring out what this surge in power demand would mean for an energy-insecure country with an energy-burdened population and a weak regulatory regime. While the data centers are fueling the growth of the country’s booming IT and business processing sectors, they are also extracting a high environmental and social cost.

So far, there are at least 40 operational and planned data centers, mostly in Metro Manila, the capital, and its outskirts. Vitro, the largest player in the local data center market, is opening up 11 facilities to clients like Microsoft, Amazon Web Services, and Google.

 

Energy advocates worry that as data centers multiply, the energy needs of millions who can barely afford electricity or have no power at all are being overshadowed by facilities that require massive amounts of it.

As more data centers come online to meet the demands of cloud computing, AI, and digital services, they could drive up power prices and enlarge the country’s overall carbon footprint at a time when the Philippines has committed to reducing emissions under international climate agreements.

Energy-burdened and energy-insecure

Energy firms in the Philippines are heavily reliant on fossil fuels, especially coal, which accounts for 60 percent of the country’s generated power. Coal is the single largest source of carbon dioxide emissions, but the country’s power producers have stalled the phaseout of coal-powered plants, citing surging power demand—including from data centers—as justification for their continued operation.

The country is already among the most vulnerable to climate change impacts; it is regularly battered by intensifying typhoons, rising sea levels, and extreme weather events. Yet the expansion of data centers, powered predominantly by coal, risks undermining the Philippines’ climate goals. The added strain on the power grid perpetuates the country’s dependence on fossil fuels and delays the transition to renewable energy sources.

This reliance on imported fossil fuel comes at a steep price. Some 15% of Filipinos live below the poverty line and for them and for many lower-middle-class homes, electricity prices are prohibitive. The country has the second highest power rates in Southeast Asia. At an average monthly consumption of 60 KwH, low-income Filipino households use up 3.7 to 8 percent of their income for electricity. Studies show that a household is considered energy burdened if it pays more than 6 percent of its income on power.

The Philippines is also considered to be energy-insecure: Most of the coal used by power plants is imported and sensitive to price increases. The Malampaya gas field in Palawan is a major source of electricity and natural gas but it is expected to run dry by 2027. Additionally, many off-grid areas in the country are heavily reliant on imported diesel.

While more than 90 percent of households have electricity, some three million homes, mostly in remote areas, have yet to be electrified. The government estimates that by 2028, data centers will have a 1,500-MW capacity. That wattage can energize five million middle-income Filipino homes, more than enough to power the three million unelectrified homes in the entire country.

Despite these challenges, the race to build more data centers continues. Industry leaders are already identifying chunks of land in Laguna and Cavite, provinces near Manila, which are seen as “data center corridors.” Meralco, the country’s biggest power distributor, has been building new transmission facilities tailored to data center needs.

Meanwhile, regulators have yet to formally assess the potential impact of data centers on the country’s energy supply and electricity prices. Energy advocates, while recognizing the need for digital infrastructure, worry that consumers will end up bearing the costs of building this infrastructure—especially as President Ferdinand Marcos Jr.’s government seeks to position the Philippines as a rival to Singapore as the region’s top data center hub.

Singapore offers a cautionary tale. From 2019 to 2022, its government imposed a moratorium on new facility construction, noting that data centers had strained the power grid and consumed so much land that little remained for expansion. But the country hasn’t abandoned the data center business. Instead, it has invested in data centers elsewhere in the region, including in the Philippines, where Singapore-owned STT’s joint venture already operates two data centers in Metro Manila on top of the four it’s building in Fairview.

Power deals for data centers

Small data centers have long existed in the Philippines. They are tucked inside  business districts teeming with firms that need data storage. Some schools and even the Supreme Court have dedicated data centers.

But around 2022, the government started issuing environmental compliance certificates to major telecommunication companies to build hyperscale data centers, like the newly launched PLDT-owned Vitro Sta. Rosa in Laguna province, which uses Nvidia chips for faster processing.

 

Two Philippine telecommunications companies currently dominate the data center business—PLDT and Globe. These are also the leading players of the fast growing and profitable telecommunications market. In addition, PLDT’s major shareholders own substantial shares in Meralco, the power distribution utility that accounts for 55 percent of the market.

Data center firms normally negotiate energy deals directly with power plant operators who can meet their energy demands. These can be coal plants, solar power farms, and liquefied natural gas providers. The government is also studying the possibility of reviving the defunct Bataan Nuclear Power Plant to serve data centers.

Once they have an energy source, data center companies negotiate with power distributors that would deliver energy to their facilities. Meralco told PCIJ that they are set to deliver 1,000 MW for 10 data centers in the coming years. The 124-MW Fairview data center alone can power the entire autonomous region of Muslim Mindanao, composed of five of the country’s poorest provinces, with only a 50% electrification rate.

“The demand is big,” Meralco networks head Froilan Savet told PCIJ. “And we need to serve that demand because that’s our mandate.”

Meralco has already built switching stations for two data centers—PLDT’s Vitro Sta. Rosa and ST Telemedia Global Data Centres’ (STT GDC) Fairview. These stations, which reportedly cost a total of P360 million, allow for a smooth flow of electricity from power plants to the data centers.

Meralco is expected to build new transmission facilities for the remaining eight data centers they had agreed to serve, and to process future requests from more firms. But this also means that the company will incur more costs or capital expenditures.

Higher power bills?

In the past, capital expenditures were mostly passed on to consumers, with the approval of the Energy Regulatory Commission. This worries Gerry Arances, executive director of the nongovernmental Center for Energy, Ecology, and Development, who asserted that when power-intensive industries rise, ordinary customers end up paying more for electricity.

“Data centers are very important,” said Arances. But, he added, consumers also need to be protected. “Our electricity costs are so high already.”

The power industry’s heavy reliance on imported fossil fuel bloats electricity prices in the Philippines. “Limited competition” among Philippine power companies also subject daily consumers to unfair pricing, according to a 2023 study by the Ateneo Center for Research and Development.

“Having a few players in the generation sector makes it easy to coordinate their actions to the detriment of the consumers,” the study said. Currently, nearly half of the national grid is dominated by only two power generation companies.

Consumer groups have also alleged that the country’s power regulators are easily influenced by powerful companies and individuals. This phenomenon, called “regulatory capture,” could skew government decisions in favor of certain energy firms and lead to higher electricity prices.

Myrine Buela, the owner of a sundry shop near the soon-to-be operational data center in Fairview, said her family of nine is paying more for electricity now even if they are already scrimping on their use of electronic appliances and using the same amount of power they had in the past. She has asked the children in her household, she said, to play outside so they would not need to use electric fans inside the house.

Meralco’s Savet explained, however, that residential, commercial, and industrial consumers situated near data centers may benefit from freed-up capacity that these sites do not use. The utility’s looped transmission design, he said, means excess power can be diverted to nearby transformers that serve other customers.

Savet said that this makes electricity more “reliable” in the areas around data centers.

Savet also said that every time Meralco undertakes new transmission upgrades, they assess whether these will have a detrimental impact on the quality of the power, as mandated by the Electric Power Industry Reform Act of 2001.

But in the U.S., reports have linked data centers to power outages. A Bloomberg investigation showed that homes near data centers have unstable power supply and were more likely to experience distorted power readings.The result: damage to electronic appliances and vulnerability to electrical fires.

What regulators don’t know

The Energy Regulatory Commission has yet to study the impact of data centers on the power sector and on Filipino consumers. In 2022, its former chairperson, Agnes Devanadera, said that data centers’ “massive” power demand needed to be studied.  Up to now, however, the study has not been done.

In 2024, the Department of Energy asked data centers to assess their energy needs and consider using renewable energy resources. But in October 2025, an energy official said that they are still “awaiting” the data centers’ feedback.

Danilo Vivar, the DOE’s chief science researcher, said the department “does not yet have official or published information on the projected capacity requirements of data centers.” It projects “300 MW to 1,500 MW of additional peak demand once the incoming data centers are factored in,” but clarified “further validation and coordination are still ongoing.”

Independent analysts are concerned about the government’s laissez-faire approach to the data center industry. Nathaniel Samiley of an industry group, Analytics and Artificial Intelligence Association of the Philippines, said that high power costs, unreliable supply, and a lack of renewable energy sources are limiting the expansion of data centers.

“There will be no data center boom if we cannot guarantee a power supply that is sufficient, stable, and clean,” said Andres Manhit, president of the international think-tank Stratbase Institute. He urged the energy department to fast-track modernizing the power grid, increasing power generation, and clearing regulatory roadblocks that are delaying data center expansion.

At the same time, however, while most of the countries in Southeast Asia have achieved universal electricity access, some 7 percent of Philippine households still do not have power. Although the Philippines is a middle-income country, this lack of universal access puts it in the same category as Laos and Myanmar, the poorer nations in the region.

Meanwhile, in communities that have sufficient power, like the one near the Fairview data center, residents are straining to keep up with rising energy costs. “These times, we really need to tighten our belts,” said Wency Curba, a longtime Fairview resident. “Money is hard to come by.”–PCIJ.org

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This story was supported by Earth Journalism Network as part of the “Dark Side of the Boom” cross-border collaboration on resource-intensive digital technology in Asia.