Malaysia to build 50% more gas-fired power capacity to meet data centre demand

Malaysia is expected to add 6-8 gigawatts of gas-fired power by 2030 to address growing electricity consumption driven by demand from data centres, an industry official said.

The country is expected to see the fastest surge in data centre power demand in South-east Asia, with its share of electricity consumed by data centres in the region to triple to 21 per cent by 2027 from 7 per cent in 2022, a joint report in May by Bain & Co with others including Google and Temasek showed.

Rising gas demand could see Malaysia, the fifth-largest exporter of liquefied natural gas (LNG), start importing the super-chilled fuel in four to five years, the head of state energy firm Petronas told the Energy Asia conference this week.

Megat Jalaluddin, CEO of state utility Tenaga Nasional, said he expects Malaysia to add 6-8 gigawatts of gas-fired power by building new plants and extending the life of existing ones as it looks to cut dependence on coal.

That represents a 40-54 per cent increase from the current 15 GW of gas-fired capacity. Total power consumption in Malaysia is on track to increase 30 per cent by 2030, and Malaysia has already invited industry proposals for supply, he said.

“We want to phase out coal responsibly. Then the next best option that can basically take the place of coal is gas,” he told Reuters on the sidelines of the Energy Asia event.

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Malaysia could also add as much as 10 GW of renewable capacity by 2030, more than doubling the 9 GW currently, as data centres push for access to cleaner sources of power, he said.

In the last two years, Malaysia has turned to its coal-fired power plants to address surging demand which grew at the fastest pace in 14 years in 2024, according to energy think-tank Ember.

Data centres are expected to require 19.5 GW of power generation capacity by 2035, accounting for 52 per cent of Peninsular Malaysia’s electricity use, from about 2 per cent now, Deputy Prime Minister Fadillah Yusof told Reuters.

Technology giants including Microsoft, Nvidia, Alphabet’s Google and ByteDance have announced billions of dollars in investments in Malaysia since the beginning of last year, powering an infrastructure boom.

Malaysia’s southern state of Johor has emerged as South-east Asia’s hottest data centre hub due to its proximity to Singapore, relatively cheap land and power and faster approvals, real estate consultancy Knight Frank said in a report. REUTERS