Trends

Modular Infrastructure Solutions for Scalable Growth in Southeast Asia

27 June 2024

 

As businesses in Southeast Asia (SEA) continue to grow, the demand for efficient, scalable, and reliable power infrastructure has never been higher. According to a report by the International Energy Agency (2022), electricity demand in SEA is projected to grow at an average annual rate of 5% through 2030, driven by economic growth and urbanization, which is expected to decrease to 3% per annum from 2030 to 2050. A separate report by PwC (2022) mentioned that by 2040, energy demand in SEA is projected to increase by 60%.

Table 1. Energy Demand in SEA
Table 1. Energy Demand in SEA
Source: International Energy Agency, 2022

 

Traditional power setups often struggle to keep up with this rapid pace of expansion, leading to increased costs, delays, and reliability issues. This is where modular infrastructure solutions (MIS), or Prefabrication (Prefab) come into play, offering a smarter way to scale up without the complications of scaling out.

 

The Challenges of Traditional Infrastructure

Traditional power infrastructure comes with a host of challenges that can impede business growth:

 

Space Constraints

Expanding physical infrastructure requires significant space, which is often a premium in urban areas. As urbanisation continues to rise in SEA, the availability of land for expansion becomes more limited and expensive. The table below shows the urbanisation rate (%) for each ASEAN country.


ASEAN countries: Urbanization from 2012 to 2022
Source: O’Neill, 2024

This, in turn, increases urban land prices, making it increasingly difficult for businesses to secure the necessary space for traditional infrastructure expansions without incurring significant costs.

 

High Costs

The capital expenditure for traditional power setups is substantial, not to mention the ongoing maintenance costs. The Global Infrastructure Hub (n.d.) estimates that the Asian region needs to invest $2.1 trillion in power infrastructure by 2040 to meet demand, as shown in the graph below.


Table 3. Infrastructure investment at current trends and need
Source: Global Infrastructure Hub, n.d.

Traditional infrastructure projects are often burdened with cost overruns and delays, further exacerbating the financial strain on businesses. A study by McKinsey & Company highlights that 98% of megaprojects suffer cost overruns of more than 30% and delays of 20 months on average (Changali, Mohammad, & Nieuwland, 2015).

 

Slow Deployment

Building and deploying traditional infrastructure can take months or even years, delaying your time-to-market. Research from McKinsey & Company shows that modular construction can reduce project schedules by 20-50% (Blanco, et al., 2023; TF Jackson, 2023). In contrast, traditional construction methods are often plagued by inefficiencies, regulatory hurdles, and logistical challenges that slow down the process. The report by Changali, Mohammad, & Nieuwland (2015) also found that construction productivity has been flat for decades, contributing to prolonged project timelines (Changali, Mohammad, & Nieuwland, 2015).


Table 4. Productivity improvement over time
Source: Changali, Mohammad, & Nieuwland, 2015

 

Reliability Issues

Traditional setups often lack the flexibility and redundancy needed to ensure continuous uptime, particularly in the face of SEA’s variable conditions. Power outages and disruptions are common issues that can significantly impact business operations. The World Bank’s Enterprise Surveys (n.d.) highlights that power outages cost approximately $82 billion annually. The reliance on a single, centralised power source means that any disruption can have wide-reaching consequences, unlike modular systems, which offer built-in redundancy to mitigate such risks.

 

One such example is the power shortage in Vietnam due to extreme weather conditions in May to June 2023, where the country suffered a loss of US$1.4 billion (0.3% of GDP), according to the World Bank’s estimation (The Daily Star, 2023).

 

 

Why Modular Infrastructure Systems?

Modular infrastructure systems offer a revolutionary alternative that addresses the challenges of traditional infrastructure head-on. Here’s why they are becoming the go-to solution for expanding businesses:

 

Scalable Solutions

Modular infrastructure systems offer customisable configurations, allowing businesses to scale their power infrastructure to meet growing demands. These configurations can be tailored to specific needs, making it easy to add or remove components as required. This flexibility ensures that the power infrastructure can grow alongside the business without the need for a complete overhaul.

 

Reliable Power Supply

Ensuring a consistent and high-quality power supply is critical, especially in regions with variable conditions. Modular systems undergo rigorous quality assurance and quality control (QA/QC) processes, ensuring reliable performance. This consistency minimises the risk of power outages and enhances operational stability.

 

Remote Monitoring

One key advantage of modular systems is the real-time monitoring of operations, reducing downtime and improving efficiency. With advanced remote monitoring capabilities, businesses can track performance, identify issues, and implement solutions promptly. This proactive approach helps maintain optimal functionality and reduce operational disruptions.

 

Space Optimization and Easy Deployment

Modular infrastructure systems are often housed in prefabricated containers, making them compact and easily transportable to your desired location. This containerised solution significantly reduces on-site construction time and minimises disruption to existing operations. Additionally, the modular design allows for flexible placement, making them ideal for areas with limited space.

 

Reduced Project Timelines and Easy Scalability

The easily transportable nature of modular systems, combined with their pre-fabricated design, significantly reduces project timelines compared to traditional infrastructure builds (Endzelis & Daukšys, 2018). Additionally, the modular design allows for easy scalability. As your business grows, you can simply add additional modules to your existing system to meet your increasing power demands. This eliminates the need for costly overhauls or entirely new infrastructure projects.

 

Enhanced Safety

Traditional construction projects involve extensive on-site work, which can pose safety risks to workers. Modular infrastructure systems address this concern by minimising on-site construction activities. The controlled factory environment where these systems are prefabricated reduces the risk of accidents and ensures better adherence to safety standards and regulations.

 

Cost-Effective

Modular infrastructure systems offer significant cost advantages compared to traditional infrastructure. Factory-based production leads to lower labour costs, time savings, and efficient resource utilisation (Endzelis & Daukšys, 2018). Additionally, some regions offer tax benefits for modular deployments. According to the Modular Building Institute (n.d.) and Bertram et al. (2019), this method can generate cost savings of up to 20% compared to traditional construction.

 

Improved ROI

Investing in modular infrastructure systems delivers a superior return on investment (ROI) compared to traditional methods. This is achieved through a combination of factors: lower upfront costs due to prefabrication, reduced operational expenses due to efficiency, and faster deployment times that get your business operational quicker. This translates to quicker returns on your investment and allows more effective capital use.

 

 

Scalable and Customizable Solutions with Modular Power

 

Meeting Specific Industry Requirements

One of the standout features of modular infrastructure systems is their ability to be customised to meet the unique needs of different industries. Whether for data centres, telecommunications, healthcare facilities, or manufacturing plants, modular solutions can be designed with specific configurations that align with industry standards and operational requirements. This level of customisation ensures that the power infrastructure supports the specialised equipment and processes essential to each industry, thereby enhancing overall efficiency and productivity.

 

Adapting to Local Regulations

Operating in Southeast Asia (SEA) presents a unique set of regulatory challenges, given the diverse legal and compliance requirements across countries in the region. Modular infrastructure systems can be tailored to meet local regulations, ensuring businesses comply with regional standards. This adaptability not only simplifies the deployment process but also reduces the risk of regulatory delays and fines, allowing for smoother and faster project completion.

 

Flexibility in Design and Functionality

The modular nature of these power systems allows for a high degree of flexibility in design and functionality. Businesses can choose from various components and configurations to build a system that precisely matches their operational needs. For instance, they can select specific types of generators, battery systems, and power distribution units that best fit their energy demands and operational conditions. This flexibility extends to the physical layout of the power systems, enabling businesses to optimise space utilisation and accommodate site-specific constraints.

 

Scalability for Future Growth

As businesses grow and evolve, their power needs can change significantly. Modular infrastructure systems are inherently scalable, meaning that additional modules can be easily integrated into the existing infrastructure to support increased power demands. This scalability allows businesses to expand their power capacity incrementally, avoiding the need for large upfront investments and extensive overhauls. Instead, they can scale up their power infrastructure in line with their growth trajectory, ensuring that their energy supply remains adequate and efficient.

 

Integration of Advanced Technologies

Modular infrastructure systems can incorporate the latest advancements in power technology, including renewable energy sources, energy storage solutions, and smart grid capabilities. This integration not only enhances the efficiency and reliability of the power supply but also supports sustainability goals by reducing carbon footprints and enabling the use of clean energy. For example, businesses can integrate solar panels or wind turbines into their modular infrastructure systems, harnessing renewable energy to offset conventional power consumption.

 

Enhanced Reliability and Redundancy

Customization also allows for the inclusion of redundant systems and fail-safes, which are critical for ensuring an uninterrupted power supply. Businesses can design modular infrastructure systems with multiple backup generators, battery storage, and automatic transfer switches to provide continuous power during outages or maintenance. This redundancy is particularly important in industries where downtime can lead to significant financial losses or jeopardise safety, such as healthcare and data centres.

 

Cost-Effective Upgrades

Finally, the modular approach to power infrastructure enables cost-effective upgrades. As new technologies emerge and power needs evolve, businesses can upgrade individual modules without replacing the entire system. This modularity reduces the total cost of ownership and ensures that the power infrastructure remains up-to-date with minimal disruption to operations.

 

 

Empowering Business Growth with Scalable Power Solutions

The rapid economic expansion across Southeast Asia presents exciting opportunities and significant business challenges. Traditional power infrastructure often struggles to keep pace with this growth, leading to limitations and inefficiencies. Modular infrastructure systems offer a powerful alternative, providing a future-proof solution for businesses seeking scalability, reliability, and cost-effectiveness.

By leveraging modularity’s advantages, businesses can gain the agility they need to adapt to changing demands. From easy deployment and space optimisation to enhanced safety and improved ROI, modular infrastructure systems empower businesses to focus on what they do best — growing their operations and achieving success.

 

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References

Bertram, N., Fuchs, S., Mischke, J., Palter, R., Strube, G., & Woetzel, L. (2019). Modular construction: From projects to products. Retrieved from McKinsey & Company:
https://www.mckinsey.com/capabilities/operations
/our-insights/modular-construction-from-projects-to-products

Blanco, J. L., Dauphinais, D., Hovnanian, G., & Palter, R. (2023). Making Modular Construction Fit. Retrieved from McKinsey & Company:
https://www.mckinsey.com/capabilities/operations/
our-insights/making-modular-construction-fit

Changali, S., Mohammad, A., & Nieuwland, M. v. (2015). The construction productivity imperative. Retrieved from McKinsey & Company:
https://www.mckinsey.com/~/media/McKinsey/Industries/Capital%20Projects
%20and%20Infrastructure/Our%20Insights/The%20construction%20
productivity%20imperative/The%20construction
%20productivity%20imperative.pdf

Global Infrastructure Hub. (n.d.). Global Infrastructure Outlook. Retrieved from Global Infrastructure Hub

https://outlook.gihub.org/region/Asia

International Energy Agency. (2022). Southeast Asia Energy Outlook 2022. International Energy Agency. Retrieved from International Energy Agency
https://www.iea.org/reports/
southeast-asia-energy-outlook-2022/key-findings

Modular Building Institute. (n.d.). Seizing the Modular Construction Opportunity. Retrieved from Modular Building Institute
https://www.modular.org/2024/02/15/seizing-the-modular-construction-
opportunity-csa-group-report/#:~:text=Owing%20to%20efficient%20
manufacturing%20practices,savings%E2%80%
94upwards%20of%2020%25.

PwC. (2022). Energy transition in Southeast Asia. PwC. Retrieved from
https://www.siew.gov.sg/docs/default-source/downloads/2022/
energy-transition-thought-leadership-short-presentation_june-2022.pdf

TF Jackson. (2023). The Efficiency of Modular Construction: A Time-Saving Solution. Retrieved from TF Jackson:
https://www.jackson-group.co.uk/blog/modular-time-saving/
#:~:text=However%2C%20when%20planned %20and%20executed,cent%20shorter
%20than%20traditional%20construction.v

The Daily Star. (2023). Power crisis costs Vietnam $1.4b: WB. Retrieved from The Daily Star:
https://www.thedailystar.net/business/economy/news/
power-crisis-costs-vietnam-14b-wb-3393466

Yap, K. (2017). Urbanisation Wave and ASEAN Regional Agenda. Retrieved from ASEAN:
https://asean.org/wp-content/uploads/2017/09/Ch.5_
Urbanisation-Wave-and-ASEAN-Regional-Agenda.pdf