High electricity demand from data centers is putting pressure on Malaysia’s power generation and grid capacity, the country’s energy regulator warns, adding that recovering the investment is proving harder due to the short-term commitments from some operators.
While some operators are willing to work with the energy agencies to stagger demand, some aren’t willing to undertake long-term commitments, Siti Safinah Salleh, Chief Executive Officer of the Energy Commission (EC) reportedly said at a seminar last week.
Electricity demand growth used to be 1.5 – 2 per cent but is now pushing 10 per cent due to data centers.
The CEO listed three issues now facing Malaysian power availability, namely supply sufficiency, the speed of infrastructure expansion, and whether the investment can be recovered.
The big mismatch is when data centers are only willing to commit to between 5-15 years of electricity demand when grid investments take about 20 years to recover on a shared basis. Also, data centers typically require power in about 18 – 24 months when they become operational while it takes more than five years to build a power plant especially now when there are supply chain constraints.
While Malaysia’s existing grid has enough capacity to support more renewable energy as it’s planned five years ahead of capacity requirement, bottlenecks exist in certain locations where there is a great concentration of demand and renewable energy developers such as in Perak. This creates a situation where demand exceeds available capacity even though capacity remains available elsewhere, said Safinah.
Data center operators on the other hand value certainty on the cost and structure of electricity procurement especially for renewable energy as it is a long-term commitment.
Malaysia’s Corporate Renewable Energy Supply Scheme (CRESS) has a relatively low take-up rate because the mechanism still faces challenges such as unused capacity cannot be easily sold back into the system, a data center operator said. CRESS should provide more adaptable arrangements for different types of data center operators, depending on their electricity requirements, utilisation and renewable-energy targets, she added.