Malaysia's Energy Regulator Warns of Investment Risk as Data Centres Outpace the Grid
· TexaHub · Geopolitics & Tech, Regional Tech Ecosystems, Risks & Opportunities
Malaysia's Energy Commission says data centres have lifted electricity demand growth to around 10% a year, and that a mismatch between grid cost recovery and short data-centre commitments poses investment risk.
Demand growth well above forecasts
Siti Safinah Salleh, chief executive of Malaysia's Energy Commission, said data centres have pushed electricity demand growth to around 10% a year, against a historical forecast of 1.5% to 2%, according to Eco-Business, which reported from the JC3 Journey to Zero Conference in Kuala Lumpur on 7 October [1].
Data centres took a record 9.3% of total power consumption in the second week of August, compared with a 2026 average of 7%, Reuters reported in September, citing Siti Safinah, who attributed part of the rise to hotter weather and cooling loads [3].
A mismatch in commitment periods
Grid investments are typically recovered over 20 years, Siti Safinah said, but some data-centre operators commit for 15 years and colocation operators for only five to six [1]. "There's going to be a significant mismatch and problem, there's a higher risk now in terms of investment recovery," she said [1].
She also noted that AI facilities can be built in 18 to 24 months, while new power plants take more than five years [1]. Google's Spencer Low said the company operates on a 20-year lifespan and wants to know its obligations by year 20 [1].
Supply constraints and renewables
Malaysia needs about 9 GW of additional gas-fired capacity by 2032, and none is expected online this year or next, Reuters reported; data centres could reach 31% of Peninsular Malaysia's demand by 2035 [3]. The Star reported current power demand above 21 GW, with gas making up about 55% of installed capacity and roughly 3 GW of applications in the Corporate Renewable Energy Supply Scheme (CRESS) [2].
Under the CRESS Acceleration Package, the system access charge was cut to 14 sen/kWh from 20 sen/kWh, with a minimum 10-year contract, Eco-Business reported. AirTrunk's Azwar Kamarudin said buyers paying high charges are also not allowed to sell unused renewable capacity back [1].
Outlook
The Star quoted Siti Safinah as expecting demand to rise in the fourth quarter as several data centres come online, with some starting in November [2]. Gary Goh of Sprint DC Consulting told Reuters the surge is within grid planning parameters [3].
Sources
[1] Data centre boom creates investment risk for Malaysia's power system — Eco-Business, 7 Oct 2026
[2] Data centres account for 9.28% of total electricity consumption — The Star, 8 Sep 2026
[3] Malaysia's data centres guzzling more power as temperatures soar, officials say — Reuters via Internazionale, 8 Sep 2026