KUALA LUMPUR: The growth of the data centre industry which will see its power needs balloon from 990 megawatts (MW) to 1,4000 MW by 2029, placing enormous strain on the national grid and water supplies, particularly in Johor, according to Public Investment Bank Bhd (PublicInvest).

This is especially when Tenaga Nasional Bhd (TNB) has already received applications for potential energy demand of 2,000MW from 10 data centres.

PublicInvest said industry experts believe without new installed capacity traditional energy reserves may not be able to support data centre growth in the next decade, with some suggesting more sustainable alternative such as nuclear power.

Data centre take 1.5-2 years to build while adding new power to the grid would take over 4 years.

PublicInvest said water supply should also be a concern, with a 100MW data centre using around 4.2 million litre of water per day, equivalent to a daily usage of 10,000 people in a city.

It also sees an imminent oversupply of data centres with only those with access to the required infrastructure and professional talent to succeed. 

"Being the country's leading communications solution provider with extensive terrestrial  connectivity as well as global subsea cable network, Telekom Malaysia (TM) is in a sweet spot to  leverage on the booming data centre market. Also, given that TM is a  government-linked entity, insufficient power and water supply issue may well be an over-rated concern," PublicInvest said.

It also said that the growth of the energy-guzzling industry would result in a surge in demand for power, which is still mainly generated using coal and gas.

"Although TNB has plans to increase the capacity  of renewable energy, we believe fossil fuel power plants will continue to generate the bulk of energy supply in the country. However, we note that contaminated  water generated from the liquid cooling system can be minimised through  advanced technology that could recirculate and evaporate used water," it said.

Beyond this, PublicInvest expects more infrastructure development such as power connectivity, internet exchange point, cable landing station and fiberoptic cables to be laid to cater for the expanding IT workloads.

It said TM is seen as the prime beneficiary in the telco space while the thirst for more energy should lead to an unprecedented surge in TNB power demand.

"For exposure in the construction sector, we favour Gamuda Bhd and IJM Corp Bhd for its track record in securing more data centre jobs. Their next- generation industrial building system would help shorten construction period as speed of deployment is crucial to these data centre operator," it said.

PublicInvest has an Outperform call on TM (target price (TP): RM8.80), TNB (TP: RM16.00), Gamuda (TP: RM9.20) and IJM (TP: RM4.20).

https://www.nst.com.my/business/corporate/2024/07/1078678/data-centres-power-needs-will-balloon-900mw-to1400mw-2029