Malaysia Faces Rising Power Demand as Data Centre Expansion Accelerates
KUALA LUMPUR — Malaysia is preparing for a significant increase in electricity demand as the country’s rapidly expanding data-centre industry consumes more power, particularly during periods of extreme heat.
Officials said data centres accounted for a record 9.3% of electricity consumption in Peninsular Malaysia during the second week of August, compared with an average of about 7% for the year. Hot weather has increased the amount of electricity required to cool the facilities.
Malaysia has become one of Southeast Asia’s fastest-growing data-centre markets, attracting major investments from international technology companies. The expansion is being supported by the country’s established digital infrastructure, telecommunications network and access to energy resources.
However, the rapid growth is creating a new challenge for the national electricity system. Officials estimate that data centres could account for as much as 31% of Peninsular Malaysia’s electricity demand by 2035 if the sector continues expanding at its current pace.
The government is therefore planning additional generation capacity while working to manage demand from existing infrastructure.
Malaysia is gradually reducing its dependence on coal-fired power generation and plans to retire its remaining coal plants by 2044. At the same time, authorities expect to require around 9 gigawatts of additional gas-fired generation capacity by 2032 to meet increasing demand.
Officials said no major new gas-fired capacity is expected to become operational during the immediate period, meaning existing power infrastructure will need to be used more efficiently while new projects are developed.
Weather conditions have added another layer of pressure. Prolonged hot weather has increased electricity consumption, while low water levels have affected hydropower generation.
Despite these challenges, authorities do not currently expect data-centre growth to cause an immediate nationwide electricity shortage. Officials believe the increase in demand remains manageable within existing grid-planning arrangements.
The development highlights the growing connection between Malaysia’s digital-economy ambitions and its energy strategy.
Data centres require continuous electricity to operate servers and cooling systems, meaning their expansion can significantly influence national power planning.
For Malaysia, maintaining reliable electricity supplies will be essential if the country wants to continue attracting large technology investments while simultaneously reducing carbon-intensive power generation.
The government will therefore face the challenge of balancing digital-sector growth, energy security, investment requirements and its longer-term transition toward a cleaner electricity system.
