Malaysia’s plan to grow its data centre capabilities to power artificial intelligence (AI) could result in the equivalent of adding two million cars to the road, according to environmental non-profit RimbaWatch, which is calling for the government to block approvals for data centres that do not commit to be fully powered by renewable energy.
To continue reading, subscribe to Eco‑Business.
There's something for everyone. We offer a range of subscription plans.
- Access our stories and receive our Insights Weekly newsletter with the free EB Member plan.
- Unlock unlimited access to our content and archive with EB Circle.
- Publish your content with EB Premium.
RimbaWatch’s new study found that 14 AI data centres – either newly completed or in the pipeline – in the Southeast Asian country will require 2.2 gigawatts (GW) of energy. This infrastructure could drive annual emissions of 9.9 million tonnes of carbon dioxide equivalent (tCO₂e) due to the tech sector’s reliance on a grid that is 81 per cent powered by fossil fuels, according to the analysis.
Of these data centres, 77 per cent – or 1.7GW of the planned 2.2GW – have no immediate plans to use renewable energy, the report finds. The data centres were mainly in the southern state of Johor, Malaysia’s data centre hub, which neighbours Singapore.
Malaysia is already the world’s second largest AI hub after the United States, with investments worth RM3.29 billion (US$777 million) pumped into new infrastructure in the first half of this year alone, as the likes of Nvidia, Microsoft, Alphabet’s Google, TikTok owner Bytedance, and Oracle have taken advantage of low electricity prices, cheap land, and tax breaks.
AI data centres, also known as hyperscalers, require advanced computing to train and run large machine learning models, consuming a lot more energy – between 20-100 megawatts (MW) of power – than conventional data centres.
Electricity demand from data centres in Malaysia is expected to exceed 5GW by 2035, according to estimates from national electricity firm Tenaga Nasional Berhad (TNB). TNB has received applications for supply exceeding 11GW, which represents more than 40 per cent of Peninsular Malaysia’s existing installed power-generation capacity.
Officials said in June that the country plans to increase its gas-fired power plant capacity by 50 per cent to meet data centre power demand, which is the largest in Southeast Asia.
Some of the tech firms planning to build data centres have made commitments to use clean energy. The largest project, the 500-MW YTL Green Data Centre Park in Johor, has committed to be powered entirely by on-site solar farms. Data centres built for Australian hyperscaler AirTrunk and American firm EdgeConneX in Selangor have made similar commitments.
In its report, RimbaWatch recommended that Malaysia’s investment, trade and industry ministry (MITI) develops a sectoral-level carbon budget and decarbonisation pathway for data centres that is aligned with the Paris Agreement’s 1.5 degree warming ceiling.
It called on MITI to include indicators on carbon emissions and water usage in a data centre investment framework that the ministry announced earlier this year. The framework should limit the approval of data centres to those committed to 100-per-cent renewables-powered operations and which will generate additional renewable capacity to sell back to the grid, RimbaWatch said.
It also asked the ministry to develop a near- and long-term water budget for the data centre sector, taking into account demand from householders and climate risks, and ensure that data centres do not exceed this budget. A data centre with a capacity of 100MW uses the equivalent daily water usage of a city of 10,000 people.
The state of Johor, Malaysia’s data centre hub, has long struggled with water scarcity and energy outages that could be exacerbated by the data centre boom, experts have warned.
Last month, Malaysia’s energy regulator introduced a revamped electricity tariff mechanism that it said would reflect the true costs of fossil fuels paid by data centres, which are heavy energy users. Companies will have to be sensitive to the price volatility of gas and coal, explained the Energy Commission.
Eco-Business has approached MITI for a response to the report’s recommendations.
