KUALA LUMPUR: Malaysia's rise as Southeast Asia's fastest-growing data centre hub is poised to not only accelerate the digital economy but also play a crucial role in the country's transition to renewable energy (RE).

According to Dr. Jasrul Jamani Jamian, an associate professor at Universiti Teknologi Malaysia's Faculty of Electrical Engineering, the increasing presence of data centre operators in Malaysia is helping the government optimise the country's existing electricity generation capacity. 

He added that this trend is expected to significantly contribute to the government's goal of achieving 70 per cent RE generation capacity, or 56 gigawatts, by 2050.

From 2021 to 2023, Malaysia approved RM114.7 billion in investments for data centres and cloud services. Moody's Ratings recently projected that the power demand for data centres in Malaysia will double to about 500 megawatts within 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 friendly," Jasrul Jamani told Bernama.

He emphasised the importance of transitioning to RE as the country expands its electricity generation capacity, moving away from low-efficiency operations.

Dr. Jasrul noted that the government is already advancing in this direction, as demonstrated by initiatives like the ongoing Fifth Large-Scale Solar (LSS5) programme and the upcoming LSS6. 

Under the National Energy Transition Roadmap (NETR), the high penetration of RE will require significant energy storage capabilities to ensure stable RE dispatch.

He pointed out that developing a large-scale battery energy storage system (BESS) with cutting-edge technology is essential to support the increasing RE capacity. 

BESS will ensure an uninterrupted energy supply for data centre operations and help operators reduce electricity costs by storing energy during off-peak hours and using it during peak periods.

Thus, the expansion of data centres in Malaysia aligns with the nation's efforts to transition from conventional to RE power generation, Dr. Jasrul said. 

He also said that the growing number of data centres in Malaysia will generate additional revenue for Tenaga Nasional Bhd (TNB), as the industry demands a high and continuous supply of electricity.

Dr. Jasrul assured that TNB's system is highly stable and capable of meeting the needs of all consumers, including data centres, with a projected power reserve margin of 28 per cent to 36 per cent in Peninsular Malaysia from 2024 to 2030.

He said the misconception that TNB needs to build new power plants to accommodate the high electricity usage of data centres, clarifying that this is not the case. 

With surplus capacity and a high power reserve margin, the presence of data centres, in actual fact, represents a positive business opportunity for TNB, he said.

https://www.nst.com.my/business/economy/2024/09/1099677/malaysias-rise-seas-fastest-growing-data-centre-hub-vital-shift-re