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“Malaysia expects data centres to account for one-third of national electricity consumption by 2035, prompting new measures to strengthen grid capacity and energy security.”
Kuala Lumpur, 02nd July 2026, 01.50pm – Data centres are expected to account for nearly one-third of Malaysia’s electricity consumption by 2035 as rapid growth in artificial intelligence (AI), cloud computing and digital infrastructure continues to reshape the country’s energy landscape.
According to the Ministry of Energy Transition and Water Transformation, electricity usage by data centres is projected to reach 73,274 gigawatt-hours (GWh) by 2035, representing approximately 33% of Malaysia’s projected electricity supply.
Currently, data centres consume around 10,544 GWh, or about 7% of the nation’s electricity demand.
AI Boom Driving Higher Power Demand
Energy Transition and Water Transformation Minister Datuk Seri Fadillah Yusof said the rapid expansion of AI and data centre investments is significantly increasing peak electricity demand across Peninsular Malaysia.
In a written parliamentary reply, he said peak demand is expected to grow at a compound annual growth rate (CAGR) of 5.1% between 2026 and 2035.
Peak electricity demand is projected to increase from 21.3 gigawatts (GW) in 2026 to 33.5GW by 2035.
Government Strengthening Power Supply
To ensure electricity reliability, the government and the Energy Commission are implementing several measures to expand generation capacity and improve grid resilience.
These include:
- Extending the operating life of selected thermal power plants as a short-term measure.
- Conducting competitive bidding to develop additional gas-fired power generation capacity.
- Expanding renewable energy supply through the Corporate Renewable Energy Supply Scheme (CRESS).
- Supporting additional large-scale solar (LSS) projects.
The government is also encouraging data centre operators to generate part of their own electricity requirements instead of relying entirely on the national grid.
According to Fadillah, greater use of self-generated power can help reduce pressure on the electricity network while improving overall grid stability.
Stricter Screening for New Data Centres
The government has also strengthened its approval process for new data centre developments through the Data Centre Task Force.
Fadillah said all new applications, including proposals to expand existing facilities, are assessed based on available grid capacity to ensure electricity supply remains secure.
He added that approvals will only be granted where developments are compatible with local power infrastructure planning and do not compromise the reliability of the national electricity system.
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