PETALING JAYA: Johor’s data centre boom may be derailed by a looming electricity supply crunch, leading to delays in rolling out such projects in the southern state, a US research firm said.
BMI, a Fitch Solutions company, said Johor is expected to face the “most severe electricity supply constraints” among major Asia-Pacific data centre hubs.
It warned the rapid development of hyperscale data centres in Johor, Sydney, Melbourne and Batam could significantly increase electricity consumption over the next five years, potentially limiting power availability for other industries and households.
“Access to electricity grid connections could become an even greater obstacle than overall power generation availability, potentially delaying a significant number of planned projects,” it said in a report.
It said Johor's red hot data centre industry could consume more than 90% of the additional electricity generated in Peninsular Malaysia in the next five years.
It estimated the state's data centres would require about 30 terawatt-hours (TWh) of electricity annually by 2031, accounting for 18% of Peninsular Malaysia's total electricity supply, up from 6% in 2026.
Johor currently has about 825 megawatts (MW) of operational data centre capacity, with another 3.9 gigawatts (GW) expected to be added over the next three to five years, due to growing demand for cloud computing and artificial intelligence (AI).
BMI expects Malaysia to increase its gas-fired electricity generation to meet growing demand, with some scheduled power plant closures potentially postponed to ensure sufficient supply.
However, it said the bigger challenge lies in connecting new data centres to the electricity grid, rather than generating enough power.
It highlighted Tenaga Nasional Bhd's planned RM43 billion investment in grid upgrades but cautioned that major electricity infrastructure projects typically require five to 10 years to complete.
“By comparison, data centre developments can progress considerably faster, creating a mismatch between infrastructure readiness and commercial project timelines,” it added.
Looking ahead, BMI expects electricity infrastructure limitations to become a major factor determining which data centre projects proceed on schedule.
Developments with secured grid connections, committed tenants and strong financial backing are expected to be better positioned to meet their construction and commissioning timelines.
Malaysia has tightened requirements for data centre developments, including restrictions introduced in February 2026 on approvals for new non-AI facilities.