Charles Santiago
Malaysia’s data centre sector is on course to swallow up nearly a third of the country’s electricity within a decade.
Government projections show demand from the industry reaching 73,274 GWh a year by 2035, up from 10,544 GWh in 2026.
To put that scale in context, it is more than 15,000 GWh above Singapore’s entire annual electricity consumption. Singapore powers a population of 6.1million.
Malaysia is choosing to commit power equivalent to running another small, wealthy nation – purely for data centres.
That raises an obvious question. What makes data centres so strategically valuable that Malaysia is willing to commit this much electricity, at a time when governance and regulation are still catching up?
Rules after the rush
The most worrying part is not that data centres could take up 31% of Malaysia’s electricity by 2035. It is that serious conversations about stringent screening and governance are only happening now.
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Between 2020 and 2025, Malaysia approved data centre projects aggressively. Mandatory scrutiny is only being discussed now, years later. So what governed those approvals before the guidelines existed?
A grid under pressure
The government’s proposed fix leans heavily on short-term measures: extend the life of thermal power plants, add more gas generation, then manage the consequences later.
That approach risks locking Malaysia’s future demand into fossil fuels for decades.
Where is the equally ambitious conversation about renewables? Schemes like the Corporate Renewable Energy Supply Scheme (Cress) help data centres buy renewable electricity. But buying green power on paper is not the same as Malaysia actually having enough of renewable energy to sell.
The real test is not whether data centres can purchase renewable energy credits. It is whether Malaysia can build clean generation, transmission and storage fast enough to keep pace with demand it has already approved.
Water, the next worry
Even if electricity issues are resolved, water use remains unaddressed. Data centres need water to cool their servers. Generating electricity also uses water, especially from thermal plants.
Malaysia’s data centres and its households draw from the same freshwater system. That system is already under growing strain, before demand from an expanding data centre industry is added.
There is also a curious gap around self-generation. Officials are encouraging data centres to produce some of their own electricity, easing the load on the national grid.
But if self-generation is becoming necessary to manage demand, it is unclear why it remains merely encouraged rather than required.
Charles Santiago is a prominent Malaysian politician, economist and human rights advocate who served three terms as the MP for Klang and has twice chaired the National Water Services Commission.
The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.
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