Just as Malaysia embarks on its energy transition journey, the country’s grid is being pushed to adapt to the rapid growth of power-hungry data centres and the increasing penetration of variable renewable energy simultaneously.
Industry experts speaking at a panel discussion on the Energy Regulatory Insights 2026 forum last week said the combination is creating new technical challenges for the country’s energy sector, requiring utilities to invest not only in new transmission and distribution infrastructure, but also in digitalisation, energy storage and greater visibility of grid-connected assets.
“Data centre is not just this big load that consumes the electricity grid, but the way it behaves is actually different,” said Tan Siew Hwa, Head of Asset Management from the Distribution Network of Tenaga Nasional Berhad (TNB), Malaysia’s national utility provider.
Unlike conventional industrial customers, whose electricity demand can fluctuate according to production schedules, data centres operate continuously and maintain a high load factor.
Hyperscale facilities can therefore exert a near-continuous peak demand on the network from the moment they are connected. This is putting existing infrastructure under pressure, particularly as data centre operators seek connections on increasingly short timelines, Tan said.
Data centres are already consuming 9.28 per cent of Malaysia’s total electricity consumption this year, with cooling systems using more energy amid a period of prolonged heat.
The challenge is further compounded by Malaysia’s renewable energy ambitions. The country is targeting renewable energy to account for 40 per cent of its power mix by 2035, with the longer-term goal of reaching 70 per cent of installed power generation capacity from renewable sources by 2050.
The growing contribution of solar and other variable renewable energy sources presents a different challenge for grid operators, as their output can fluctuate according to weather conditions.
Grid planners therefore need to account for both large and relatively inflexible loads coming from data centres, alongside variable generation from renewable energy.
Norhasbi Abdul Wahab, Head of Grid Planning at TNB, who also spoke on the panel, said Malaysia will need to build a “strong backbone” for the grid to withstand disturbances arising from generation and demand.
“We have to prepare a grid that is very robust and strong, so it can withstand any variation from renewable energy,” he said.
He also acknowledged the rapid expansion of data centres that is creating a new type of demand for grid planners to manage.
“In the last three years, we have seen data centres coming to our country, and then they are starting to take a big chunk of [our] load. This is a new animal for us,” Norhasbi said, noting that utilities need to consider reliable supply to data centres, but also their effect on the wider grid.
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Creating visibility of all grid-connected users [is important] because, for system operators, we cannot manage what we cannot see.
Rofidah Mohamad, Chief Engineer of Grid Security Management, GSO Malaysia
Strengthening the grid will not necessarily mean building new lines and infrastructure alone.
Norhasbi said technologies that can increase the flexibility of the existing network will become increasingly important as Malaysia accommodates more renewable energy and new sources of demand.
He said technologies such as flexible AC systems and dynamic line rating can help utilities make better use of existing assets rather than immediately building new lines.
Energy storage, including batteries and pumped-storage hydropower, could also provide additional flexibility by helping the system respond to fluctuations in renewable generation, he added.
Flexibility and visibility of the grid
The importance of flexibility is also emerging from studies conducted by Malaysia’s Grid System Operator (GSO), which is responsible for the secure and reliable operation of the national grid.
Rofidah Mohamad, Chief Engineer of Grid Security Management at GSO Malaysia, highlighted a 2021 renewable energy penetration study that examined how much solar generation the existing network could safely accommodate without additional measures.
The study subsequently identified battery energy storage systems, solar curtailment and demand response as potential measures to support higher renewable energy penetration.
GSO began another holistic study examining the flexibility required to accommodate higher levels of solar renewable energy and electric vehicle adoption, following the launch of the National Energy Transition Roadmap in 2023.
The study is still ongoing, Rofidah said, but early lessons reveal that “flexibility is just as important as capacity for system operation.”
This will be critical as the grid becomes “more complex and more dynamic” due to intermittent renewable resources and new forms of electricity demand coming from data centres.
She also said that as more renewable energy comes from distributed sources such as rooftop solar, having greater visibility of existing networks is crucial for operators to better manage the system.
“We cannot manage what we cannot see,” Rofidah said, stressing the need for greater visibility of connected users and the assets behind connection points, rather than having “black boxes” within the system.
This challenge is particularly pronounced at the distribution level. TNB currently has around 100,000 rooftop solar connections to its low-voltage network, but has limited visibility into how these distributed resources are behaving in real time.
Panel discussion on building Malaysia’s future power grid at Energy Regulatory Insights (ERI) 2026, held at Sunway Resort, Selangor, in conjunction with the Energy Commission’s 25th anniversary. Image: Siva Selan/Eco-Business
Tan said this lack of visibility can create challenges as electricity flows increasingly in both directions, from the grid to consumers and from rooftop solar installations back into the network.
A survey conducted by TNB across 400 residential households in April and May recorded more than 6,000 incidents of solar inverter tripping, she said. Voltage fluctuations associated with rooftop solar generation were among the issues being investigated with digital tools being touted as part of the solution.
However, panellists cautioned that they cannot replace physical infrastructure.
Mohd Khairun Nizam, Grid Integration Expert at Huawei Technologies, agreed that digitalisation can help utilities improve visibility and forecasting as more renewable energy, storage and flexible loads are connected to the system.
But he cautioned against treating technologies such as artificial intelligence as a universal solution to grid challenges.
Some changes in the power system, such as those involving inertia and frequency response, occur within milliseconds and require physical equipment capable of responding almost instantaneously rather than AI-based technology, he said.
“We can solve things with AI, but not everything is going to be solved by AI.”
He pointed to increasingly intelligent solar inverters as one example, noting that in some markets, regulations allow inverters to automatically respond to voltage fluctuations and provide reactive power support to prevent unnecessary tripping.
Such capabilities could become increasingly relevant for Malaysia as distributed renewable energy continues to grow.
