Data centre investors will be required to pay for electricity transmission upgrades to ensure national power infrastructure remains unburdened, says Johari Abdul Ghani.
KUALA LUMPUR: Data centre investors will be required to bear the cost of upgrading electricity transmission lines to meet their power requirements, Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said.
He said the growing number of data centres could put pressure on existing electricity transmission infrastructure, necessitating upgrades to meet rising demand for power.
“From an infrastructure funding perspective, we do not have a problem with transmission lines because we have sufficient power capacity. However, as more data centres come in, transmission lines could become a problem.
“Tenaga Nasional Bhd (TNB) will advise that if a data centre wants 1,000 megawatts of power, investment in transmission line upgrades will be required. We want to include these costs as part of the expenses borne by investors setting up data centres.
“This is our strategy to ensure that economic activities already taking place are not affected by the arrival of data centres,” he said during a question-and-answer session in the Dewan Rakyat today.
He was responding to a supplementary question from Rodziah Ismail (PH-Ampang) on safeguards to ensure additional infrastructure costs, including electricity generation for data centres, would not burden other parties.
Johari said data centre operators would also have to pay for their allocated electricity capacity, even if they did not use it in full once their facilities and power supply were operational.
“If they apply for 200 megawatts but use only 100 megawatts, they will still be charged for the remaining 100 megawatts. If they fail to pay, we will not allow them to operate,” he said.
He said the federal government would oversee data centres’ energy requirements through the Energy Commission, the Ministry of Investment, Trade and Industry (MITI) and the Finance Ministry to ensure existing electricity supplies for industries and domestic consumers were not affected.
Johari also urged state governments to exercise caution when approving water supplies for data centres to ensure existing resources remained sufficient.
“As of today, the use of technology to recycle water is a mandatory requirement that we have imposed,” he said.
In response to Rodziah’s original question on mechanisms to measure the net value added from RM385.7 billion in approved data centre investments since 2021, Johari said the Data Centre Task Force (DCTF) had set a minimum local content requirement of 30 per cent for each data centre built.
“This localisation strategy is expected to increase the integration of local companies into data centre supply chains, create job opportunities, build local companies’ capacity to compete globally and reduce reliance on imported products, particularly servers, systems integration, cooling systems and electrical systems,” he said.
Johari said data centres’ contribution to gross domestic product (GDP) rose from RM900 million in 2021 to RM14.1 billion in 2025, based on estimates by Bank Negara Malaysia.
He said the increase reflected greater economic activity generated by data centre construction and operations, higher utility spending, and efforts to ensure locally produced equipment and materials were used for some construction work.