Market Overview

The Indonesia Study of Data Center Water Consumption Market highlights a crucial and often overlooked sustainability issue in the country’s rapidly growing digital infrastructure ecosystem. As Indonesia emerges as a leading digital hub in Southeast Asia—driven by booming e-commerce, cloud adoption, fintech, and government-backed digital transformation initiatives—the number of data centers is expanding quickly.

Data centers, however, are resource-intensive facilities, consuming significant amounts of electricity and water to keep servers cool and operational. Water is primarily used in cooling towers, humidification systems, and chiller plants, making water consumption a critical sustainability concern in Indonesia, where urban water scarcity and climate change are growing challenges.

This study examines the scale of water use by Indonesian data centers, the technological and regulatory landscape, and the sustainability initiatives aimed at reducing water intensity while supporting digital growth.

Meaning

The Data Center Water Consumption Market refers to the study and measurement of how much freshwater, reclaimed water, or alternative cooling resources data centers use to maintain optimal operations. Water consumption is often expressed in terms of liters per kWh of IT load or Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE) metrics.

Key components include:

• Cooling Towers & Chillers: Use large amounts of water for heat exchange.

• Air Humidification Systems: Maintain server room air quality and reduce static electricity.

• Direct-to-Chip and Liquid Cooling Systems: New technologies that can reduce or eliminate water consumption.

• Wastewater Management: Recycling or reusing greywater to reduce freshwater dependence.

In Indonesia, balancing digital expansion with water sustainability is becoming a strategic imperative for operators, regulators, and environmental policymakers.

Executive Summary

The Indonesia Data Center Water Consumption Market Study reveals that the country’s data centers consumed approximately 12 million cubic meters of water in 2024, a figure projected to reach 20 million cubic meters by 2030, reflecting the sector’s rapid expansion.

Key findings include:

• Indonesia’s water usage per MW of IT load remains higher than global benchmarks due to reliance on traditional cooling technologies.

• Urban centers such as Jakarta, Surabaya, and Batam face the highest water stress risks.

• Regulatory agencies are beginning to push for green building standards and resource reporting requirements for new hyperscale data centers.

• Adoption of air cooling, recycled water, and hybrid cooling systems is expected to grow over the next decade.

Key Market Insights

• Hyperscale expansion: Investments from Google, Amazon Web Services (AWS), Microsoft Azure, and local players are increasing water demand.

• Cooling innovations: Shift toward indirect evaporative cooling, modular chillers, and liquid immersion systems.

• Regional disparities: Urban areas like Jakarta face stricter sustainability concerns compared to emerging secondary hubs.

• Policy momentum: The Indonesian government is integrating water efficiency goals into its smart city and data sovereignty programs.

• Stakeholder awareness: Enterprises and investors increasingly view water sustainability metrics as critical in ESG (Environmental, Social, Governance) reporting.

Market Drivers

1. Digital Transformation: Growth of cloud services, fintech, and e-commerce platforms significantly increases data center demand.

2. Hyperscale Data Center Investments: Global tech giants expanding capacity in Indonesia accelerate water consumption.

3. Urbanization and Smart Cities: Rising demand for edge and core data centers near dense urban hubs.

4. Environmental Pressures: Public scrutiny and investor focus on ESG performance push operators to monitor water use.

5. Climate Change: Rising temperatures increase cooling requirements in tropical environments, directly affecting water use.

Market Restraints

1. Water Scarcity Risks: Rapid consumption in water-stressed regions threatens long-term sustainability.

2. High Costs of Advanced Cooling: Liquid cooling and closed-loop systems require high upfront investment.

3. Regulatory Gaps: Current frameworks for water use reporting are still evolving, creating uncertainty.

4. Operational Complexity: Transitioning from traditional cooling towers to advanced systems requires specialized expertise.

5. Infrastructure Limitations: Access to recycled or non-potable water sources is limited in certain regions.

Market Opportunities

1. Sustainable Cooling Technologies: Adoption of air-based cooling, liquid immersion, and modular systems.

2. Water Recycling & Reuse: Investments in greywater treatment and circular water systems.

3. Green Certifications: LEED, EDGE, and Uptime Institute certifications create opportunities for differentiation.

4. Policy & PPPs: Public-private partnerships to establish sustainable utility frameworks for digital infrastructure.

5. Localized Data Centers: Smaller, distributed edge facilities with lower water footprints.

Market Dynamics

• Supply Side: Global OEMs, HVAC suppliers, and cooling system innovators are entering the Indonesian market.

• Demand Side: Hyperscale providers, colocation players, and enterprise data centers driving large-scale procurement.

• Technology Evolution: Increasing adoption of AI-driven cooling optimization and IoT-based water monitoring.

• Policy Influence: Government energy and water authorities collaborating to align with Indonesia’s Net Zero 2060 commitments.

Regional Analysis

1. Jakarta (Java Island):

   • Largest concentration of hyperscale and colocation data centers.

   • High water stress due to population density and industrial demand.

2. Surabaya (East Java):

   • Growing as a secondary hub; moderate water availability but increasing demand.

3. Batam (Riau Islands):

   • Strategic for international connectivity; focus on sustainable infrastructure to attract foreign investors.

4. Medan & Bandung:

   • Emerging regional hubs with potential for new facilities and water-efficient greenfield projects.

5. Rural Edge Deployments:

   • Smaller edge facilities consuming less water, often relying on alternative cooling.

Competitive Landscape

The Indonesian market features global technology providers, regional colocation companies, and local engineering firms competing to provide efficient cooling and water management solutions.

Key Players Include:

• Equinix (entered Indonesia through expansion plans)

• Princeton Digital Group

• DCI Indonesia

• Google Cloud

• Amazon Web Services (AWS)

• Microsoft Azure

• NTT Global Data Centers

• PT Telkom Indonesia (through NeutraDC initiative)

Strategies include deployment of green data centers, collaborations with utility providers, and investment in advanced cooling systems.

Segmentation

1. By Cooling Method:

   • Air-based Cooling

   • Liquid Immersion Cooling

   • Evaporative & Hybrid Cooling

   • Chilled Water Systems

2. By Water Source:

   • Freshwater

   • Reclaimed/ Greywater

   • Seawater Cooling Systems

3. By Data Center Type:

   • Hyperscale

   • Colocation

   • Enterprise

   • Edge Data Centers

4. By End-User Industry:

   • IT & Telecom

   • Banking & Financial Services (BFSI)

   • Government & Public Sector

   • Healthcare

   • E-commerce & Cloud Providers

Category-wise Insights

• Hyperscale Facilities: Highest water demand; pressure to adopt next-gen sustainable cooling.

• Colocation Providers: Balancing cost with client ESG expectations; trend toward hybrid cooling.

• Edge Data Centers: Lower consumption per site but collectively impactful as deployments scale.

• Liquid Cooling Systems: Gaining traction for AI-heavy workloads requiring higher densities.

Key Benefits for Industry Participants and Stakeholders

1. Sustainability Leadership: Early adoption of water-efficient cooling strengthens ESG positioning.

2. Cost Savings: Long-term savings from reduced water and energy consumption.

3. Regulatory Compliance: Future-proofing against stricter water use and environmental reporting requirements.

4. Brand Differentiation: Operators can attract global clients by committing to green data centers.

5. Resource Resilience: Reduced reliance on scarce freshwater enhances operational reliability.

SWOT Analysis

Strengths:

• Rapid growth in digital economy.

• Government support for data sovereignty and infrastructure.

• Availability of international investment.

Weaknesses:

• High dependence on freshwater sources.

• Limited expertise in advanced water management.

• Gaps in national reporting standards.

Opportunities:

• Water reuse and recycling technologies.

• Greenfield edge deployments with efficient cooling.

• Public-private collaborations for water-smart infrastructure.

Threats:

• Water scarcity and climate risks.

• Rising operational costs from utilities.

• Competitive pressure from regional hubs like Singapore and Malaysia.

Market Key Trends

1. AI-Optimized Cooling Systems for real-time water efficiency.

2. Green Data Centers certified with LEED and EDGE standards.

3. Use of Greywater and seawater for non-potable cooling purposes.

4. Hybrid Cooling Technologies blending air and liquid systems.

5. Corporate ESG Mandates requiring disclosure of water usage effectiveness (WUE).

Key Industry Developments

• 2024: Telkom Indonesia’s NeutraDC launched a roadmap for water-efficient green data centers.

• 2023: Princeton Digital Group announced investment in Jakarta with focus on sustainable cooling.

• 2023: International collaboration between Equinix and local partners to evaluate seawater cooling feasibility in Batam.

• 2022: Government introduced draft guidelines for reporting water usage effectiveness (WUE) in hyperscale facilities.

• 2022: AWS announced investments in AI-driven cooling optimization for its Indonesia data centers.

Analyst Suggestions

1. Invest in Water-efficient Technologies: Prioritize air-cooled and liquid immersion systems for hyperscale facilities.

2. Collaborate with Utilities: Explore circular water systems using greywater or seawater.

3. Focus on ESG Reporting: Transparent WUE metrics to attract sustainability-conscious clients.

4. Leverage Public-private Partnerships: Align with government green infrastructure goals.

5. Educate Workforce: Train engineers on advanced cooling and water recycling practices.

Future Outlook

The future of the Indonesia Data Center Water Consumption Market will hinge on balancing digital infrastructure growth with environmental sustainability. By 2030, operators are expected to adopt hybrid cooling, wastewater recycling, and AI-driven optimization as standard practices.

With government support, corporate ESG commitments, and technological innovation, Indonesia has the potential to become a regional leader in sustainable data center operations, minimizing water stress while fueling digital transformation.

Conclusion

As Indonesia accelerates toward becoming a Southeast Asian digital powerhouse, addressing the water consumption footprint of data centers will be critical. Stakeholders that embrace sustainable cooling innovations, transparent ESG reporting, and local partnerships will not only mitigate environmental risks but also strengthen their competitive position in the fast-growing market.