Beneath Punggol, in northeastern Singapore, a five-kilometer network of metal pipes circulates chilled water to cool the office buildings and classrooms above. In the same area, Engie operates two district cooling systems that serve around 8,000 public housing units.
This technology, known as district cooling, is actually 140 years old. It has now re-emerged as one of Singapore's key solutions for coping with temperatures that are rising twice as fast as the global average.
Singapore has installed similar networks in at least eight districts. The largest is the Marina Bay network, which is claimed to be the world's largest underground district cooling system and has been in operation since 2006.
This expansion comes as Singapore prepares for an extremely hot season projected to be driven by the Super El Niño phenomenon, while a number of countries, including Singapore, are facing energy shortages due to the United States–Iran conflict.
How the Technology Works and Its Origins
District cooling operates on a relatively simple principle. Water is chilled to around 7 degrees Celsius in large tanks containing refrigerants, then distributed to heat exchangers in buildings.
Warm indoor air is cooled as it passes over the chilled water before being recirculated through ventilation systems. The warmed water is then pumped back to the central plant, where its excess heat is released through cooling towers.
The first generation of district cooling systems was installed in Denver, United States, in 1889, using ammonia or brine solution as the distribution fluid. According to research cited by Bloomberg, the use of water as the cooling medium only began in the 1960s in the eastern United States and Europe.
The Scale of Singapore's District Cooling Network
The Marina Bay network, operated by SP Group, is set for further expansion. The capacity of its main network is planned to increase by 2,000 refrigeration tons (RT), reaching 75,000 RT by 2027.
With the addition of two new satellite plants in the Central Mall–Central Square and Marina Square areas, the network's total capacity is targeted to reach 90,000 RT.
At full capacity, the system is claimed to reduce cooling energy consumption by up to 20 percent, lower ownership costs by up to 15 percent, and cut carbon emissions by 25,000 tons annually—the equivalent of removing 22,700 cars from the roads.
In the public housing sector, Tengah became the first project to implement a residential district cooling system. Since 2020, residents have been able to subscribe to the service, which is managed by SP Group and Daikin.
The system is claimed to deliver energy savings of up to 30 percent and reduce life-cycle costs by up to 20 percent compared with conventional air-conditioning systems.
However, when the system began operating in 2023, some residents reported issues such as water leaks and warm air being discharged from their units.
In addition to SP Group, HDB has partnered with Keppel as a district cooling system operator for several other Build-To-Order (BTO) projects in Tengah. In April 2026, HDB awarded a new contract to Keppel for nine additional projects, bringing the total number of households connected to Keppel's system to around 14,000 across 12 Tengah BTO projects.
Engie, which operates two district cooling systems in Punggol, estimates that Singapore's district cooling market currently has a capacity of around 323,000 RT and could double within the next decade. The company also sees similar potential for capacity expansion in Singapore, Malaysia, and the Philippines.
Rising Temperatures and Future Challenges
According to the Meteorological Service Singapore (MSS), Singapore's average surface temperature increased by 0.25 degrees Celsius per decade between 1948 and 2025. By comparison, the global warming rate between 1951 and 2012 was recorded at 0.12 degrees Celsius per decade—roughly half Singapore's rate.
The Singapore government has designated 2026 as the Year of Climate Adaptation, with one of its key initiatives being a US$40 million investment in heat-related research.
However, the expansion of district cooling systems is not without challenges. The technology is expected to face increasing competition for water resources from other industries, particularly amid the global boom in data centers, which consume significant amounts of water.
In Johor, Malaysia, local authorities temporarily halted approvals for less water-efficient data center developments due to concerns over a potential water crisis.
