Growth Of Data Centre Industry Supports Malaysia's Transition To Renewable Energy

By Norsyafawati Ab Wahab

KUALA LUMPUR, Sept 1 (Bernama) -- Malaysia’s status as Southeast Asia’s fastest growing data centre hub will not only spur the growth of the digital economy but also be a catalyst in the nation’s transition towards renewable energy (RE).

Dr Jasrul Jamani Jamian, associate professor at Universiti Teknologi Malaysia’s Electrical Engineering Faculty, said the inflow of data centre players to Malaysia helps the government in optimising the country’s existing electricity generation capacity.

At the same time, he said, it will be a driver in realising the government’s efforts towards an RE generation capacity target of 70 per cent or 56 gigawatts in the energy sector by 2050.

From 2021 to 2023, Malaysia approved investments worth RM114.7 billion in data centre and cloud services.

It was also reported recently that Moody’s Ratings projected the power requirement for data centres in Malaysia to double to about 500 megawatts in the next two years.

“It’s high time for power generation using natural resources such as coal and gas, especially those that have been operational for 25 to 30 years, to be replaced with RE, which is more efficient and environmentally friendy,” Jasrul Jamani told Bernama.

He said that in expanding electricity generation, there is a significant need to transition towards RE from low-efficiency operations.

”The government is actually already moving in that direction, such as through the implementation of the Fifth Large-Scale Solar (LSS5) programme currently and the upcoming LSS6,” he said.

He noted that under the National Energy Transition Roadmap (NETR), with the high RE penetration, the country will require a large energy storage capability to ensure a stable RE dispatch.

He said the development of a large-scale battery energy storage system (BESS) using state-of-the-art technology is in line with the rise in RE capacity. 

BESS, he said, will ensure that there will be no energy supply disruption affecting data centre operations.

Jasrul Jamani said BESS will also help data centre operators in reducing electricity bill cost by storing energy outside peak hours and using it during peak hours.

“Therefore, the development of data centres in Malaysia is in tandem with national efforts to transition from conventional power generation to RE generation,” he said.

He said the setting up of more data centres in Malaysia will bring revenue gains for Tenaga Nasional Bhd (TNB) as the data centre industry requires a high and continuous supply of electricity. 

According to him, TNB’s system has an excellent stability and capability level for meeting the needs of all consumers, including data centres, based on its projected power reserve margin of 28 to 36 per cent in Peninsular Malaysia from 2024 to 2030.

“Some people may have the notion that TNB should build a new power plant given that there will be a lot of data centres using a high amount of electricity. That is not the case.

“As we have surplus capacity and a high power reserve margin, the presence of data centres actually translates into good business for TNB. There is no issue about reliability or grid stability being affected due to the data centre development, as the utility firm has the capacity to support the high demand from data centres,” he said.

-- BERNAMA