Malaysia tightens data centre investment rules to protect utility supplies

The Malaysian government is tightening investment requirements for data centres to protect domestic electricity and water supplies. With 57 data centres currently operating using 6,230 MW of electricity, an additional 60 approved or developing facilities are expected to require 11,172 MW upon operation.

Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani stated that investors will be responsible for the costs of upgrading related infrastructure, such as electricity transmission lines. The government also plans to separate data centre electricity requirements from the existing supply system used by households and other industries to ensure national reserves are not compromised.

In a related development, Deputy Energy Transition and Water Transformation Minister Datuk Seri Abdul Rahman Mohamad has proposed that data centre operators generate their own electricity, potentially through solar power and battery storage. The government is also reviewing water usage, considering requirements for facilities near water sources to develop their own on-site supply systems to prevent impacting other consumers.

Currently, while 45 of 62 data centres with electricity supply agreements have begun operations, there is a notable gap between their contracted maximum load of six gigawatts and their actual consumption of approximately 1.37 GW. Malaysia aims to increase renewable energy capacity to 35% by 2030 and 70% by 2050.