Malaysia data centre expansion and resource management

The Malaysian government is implementing stricter investment rules for data centres to safeguard domestic electricity and water supplies. To protect national reserves, officials have proposed that investors bear the costs of upgrading infrastructure, such as electricity transmission lines, and that data centre electricity requirements be separated from household and industrial supply systems.

Proposed measures include requiring operators to generate their own electricity through solar power and battery storage, as well as developing on-site water supply systems to avoid impacting other consumers.

This regulatory shift coincides with massive projected growth in energy demand. Electricity consumption by data centres in Peninsular Malaysia is expected to rise from 10,544 GWh in 2026 to 73,274 GWh by 2035, accounting for approximately 31 percent of the region’s total demand. Meeting this demand is projected to require an estimated RM93 billion investment to develop 24.3 GW of new solar capacity between 2026 and 2035, much of which would be paired with Battery Energy Storage Systems (BESS).