Malaysia unveils further new data center restrictions amid new restriction announcements on a daily basis throughout the current Parliamentary sitting. The latest announcement came from Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani who said yesterday that states which do not have sufficient water supply will not be allowed to host data centers even when land is available.
Johari added that Malaysian Investment Development Authority (Mida) will work with state governments to assess water requirements. While there is no blanket moratorium on new data centers, there will be stricter scrutiny. Applications will be assessed based on water availability, electricity supply and investors’ financial strength.
The minister did not name the states that are experiencing water shortage nor those that might potentially face a water crunch.
Malaysia has approved 117 data centers nationwide, out of which 55 are operational, 19 are under construction and 16 have received approval but have yet to begin construction. The remaining 27 are at various stages of development, with many expected to use off-grid electricity. Johari said electricity demand could reach 23–23.5GW if all 117 projects were fully operational.
Electricity availability will be assessed in consultation with Tenaga Nasional Bhd (TNB), the country’s electricity utility. Data centers which get their electricity through TNB will be charged market rates without subsidies. This is to ensure sufficient electricity for other industries and to protect TNB’s reserve margin.
Furthermore, as announced in Parliament earlier, operators are required to pay for their entire contracted electricity capacity even if their actual usage is lower. This is to prevent speculative reservation and stranded capacity.
An example is when an operator’s contracted capacity is 300 megawatts (MW) but it uses only 100MW. The operator must still pay for the full 300MW.
Data centers in Malaysia are only using 58.5 per cent of their contracted electricity demand as in August. Actual usage was 1,374MW against a contracted 2,346MW, according to Deputy Prime Minister Datuk Seri Fadillah Yusof earlier.
In a recent Parliamentary sitting, it was announced that data centers are required to use renewable energy sources to supply at least 30 per cent of their energy requirement. The operators will also have to ensure 30 per cent local content for their data center developments.