Malaysia’s gas-guzzling data centre boom clashes with its clean energy goals

Malaysia has staked its economic future on becoming Southeast Asia’s data-centre capital. It has also promised to slash fossil fuel use by 2050. Right now, those two ambitions are pulling in opposite directions – and gas is winning.

There were 54 operational data centres across Malaysia by the end of 2024, with that number expected to rise to 81 by 2035, government minister Akmal Nasrullah Mohd Nasir told parliament last year.

In the handful of years from 2021 and mid-2025, some 144.4 billion ringgit (US$36.3 billion) in data-centre and cloud-computing investments were approved by the Malaysian Investment Development Authority, reflecting landmark pledges from AI hyperscalers including Microsoft, Google and Amazon Web Services.

All those server racks humming around the clock require massive amounts of energy to stay functional and cooling to prevent their component parts from overheating. Increasingly, the power they need is coming from gas-fired turbines.

Gas-fired power generation surged 50.5 per cent year on year in April – its fastest annual pace in at least eight years – hitting a record 5.54 terawatt-hours, data from Malaysia’s Grid System Operator showed.

Electricity demand on the peninsula, which accounts for about 80 per cent of national demand, jumped 11.5 per cent over the same period and forecasts point to it climbing further.

Demand had already hit a new peak last year, industry regulator the Energy Commission confirmed in its annual review in April, driven by data-centre growth, electrification, climate stress and electric-vehicle uptake.