Johor data centers risk using more than 90% of Peninsular Malaysia’s additional power generation by 2031

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Johor data centers & electricity 2031

Highlights

Johor data centers are expected to use more than 90% of Peninsular Malaysia’s additional power generation by 2031, equivalent to 18% of total electricity supply.
BMI expects some Johor data center projects to face delays due to grid connection constraints, even as demand for cloud computing and AI continues to grow rapidly.
Tenaga Nasional Bhd plans to invest RM43 billion in grid upgrades, but a five-to-10-year completion period could slow the development of new data centers.

This article was translated from the original. Read the original version by our correspondent here.

Demand projections and grid constraints

As reported by The Edge Malaysia, citing BMI, a Fitch Solutions company, data centers in Johor could use more than 90% of the additional electricity generated in Peninsular Malaysia by 2031. The macroeconomic research firm estimates that data centers in Johor will require about 30 terawatt-hours of electricity annually by 2031, equivalent to 18% of Peninsular Malaysia’s total electricity supply, up from 6% in 2026.

BMI warned that Johor could face the tightest electricity supply constraints among the regional data center hubs it tracks, including Sydney and Melbourne in Australia, and Batam in Indonesia. According to BMI, the bigger challenge is not generating enough power, but connecting new data centers to the electricity grid, as grid infrastructure development takes longer than data center construction.

Although Peninsular Malaysia’s grid is operating at an estimated 30% of its overall capacity, data center development is concentrated in areas such as Sedenak and Nusajaya, where local electricity infrastructure is coming under increasing strain. BMI also expects some planned data centers to face delays, particularly projects that have yet to secure electricity connections, even as demand for cloud computing and artificial intelligence (AI) continues to grow.

Project pipeline and implications for the energy sector

Johor currently has about 825 megawatts of operational data center capacity, with a further 3.9 gigawatts expected to be built over the next three to five years. Major projects include YTL Power International Bhd’s 1.2GW data center campus, with the first 300MW expected to begin operations in the first quarter of 2027, and Vantage Data Centers’ 300MW facility in Sedenak, backed by U.S. alternative asset manager DigitalBridge Group Inc.

BMI said Tenaga Nasional Bhd plans to invest RM43 billion in grid upgrades, but major infrastructure projects typically take five to 10 years to complete, potentially slowing the development of new data centers. The research unit also expects Malaysia to increase gas-fired power generation to meet rising demand, with some scheduled power plant closures potentially delayed to ensure supply remains sufficient.

Under BMI’s base-case projections, electricity generation is still expected to meet demand. However, stronger-than-expected data center activity could continue to strain supply and increase the risk of infrastructure bottlenecks in Johor’s main hubs.

Proposed “user-pays” electricity pricing system for large consumers such as data centers was the focus of our earlier coverage, as the government assessed the impact of rising electricity demand on supply costs and other consumers. In that report, we outlined the rationale for shifting some costs to energy-intensive users, alongside demand management measures such as time-of-use tariffs and factors driving pressure on household electricity bills.

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