Malaysia plans separate wholesale electricity market for data centres by 2029 or 2030
Malaysia plans to introduce a separate wholesale electricity market for large consumers, including data centres, by 2029 or 2030. The Energy Commission aims to accommodate data centre expansion without raising energy costs for other industries. Growing demand from large companies is deemed sufficien
PETALING JAYA (Nov 12): Malaysia plans to introduce a separate wholesale electricity market for large consumers, including data centres, by 2029 or 2030, seeking to accommodate their expansion without directly increasing energy costs for other industries.
Energy Commission director of market regulation and planning Rumaizi Abdul Halim said the proposal would allow the existing single-buyer market serving households, factories and commercial premises to continue operating as usual, Utusan Malaysia reported. Speaking at a Bursa Malaysia panel discussion on Tuesday (Nov 10), he said growing demand from large companies was sufficient to support a separate wholesale market. Both markets would operate under a common framework and a single market operator. However, details of how they would interact had yet to be explained, the New Straits Times reported.
The proposal comes amid different development timelines. Rumaizi said data centres could be built within 12 to 24 months, while power generation projects typically required four to five years. Equipment supply constraints could extend the latter to six or seven years, Utusan Malaysia reported.
In a parliamentary reply reported by Bernama on Oct 19, the Ministry of Energy Transition and Water Transformation (PETRA) projected that peak electricity demand from data centres in Peninsular Malaysia would reach 8.39 gigawatts (GW) by 2030, based on electricity supply planning estimates. Johor was expected to account for 4.42GW, followed by Selangor at 1.48GW. PETRA said both states, as major data centre hubs, would require electricity infrastructure planning that takes account of the anticipated growth.
Meanwhile, Tenaga Nasional Bhd (TNB) chief distribution network officer Ahmad Sazree Abd Aziz said the utility was committed to connecting data centres to the grid within a year of approval by the ministry-chaired committee, Bernama reported on Oct 27. He said demand forecasting, network capacity planning and targeted infrastructure development were needed to prepare the network for rising consumption, alongside closer coordination between transmission and distribution systems.
Regulators are also examining the gap between electricity capacity requested by data centre operators and actual consumption. PETRA deputy minister Datuk Seri Abdul Rahman Mohamad said the Energy Commission was studying the difference to improve electricity and water supply planning, RTM reported on Oct 13. Deputy Prime Minister and Energy Transition and Water Transformation Minister Datuk Seri Fadillah Yusof subsequently told the Dewan Rakyat that contracted electricity demand from data centres totalled 2,346 megawatts (MW) as at August 2026, compared with actual usage of 1,374MW, or 58.5 per cent, Bernama reported on Oct 28. He said estimates submitted for supply contracts did not necessarily match actual usage.
According to Fadillah, applications undergo technical assessment by the Energy Focus Group before reaching the Data Centre Task Force, covering supply capability, transmission and distribution networks, and infrastructure investment needs. The government has also introduced measures to prevent the infrastructure costs of data centre expansion from being unfairly passed on to other consumers. In a written parliamentary reply reported by The Star on Oct 20, Fadillah said these followed the principle that parties creating additional system requirements should bear the related costs. Measures include an Ultra High Voltage tariff introduced on July 1, 2025, and an increased Connected Load Charge to discourage operators from requesting electricity capacity beyond their actual needs.
Fadillah said the Energy Commission was developing a framework and guidelines for self-generation and renewable energy use, following the government’s decision to require at least 30 per cent renewable energy consumption by the sector. Operators were encouraged to install solar for their own use and participate in the Corporate Renewable Energy Supply Scheme (CRESS) to procure green electricity directly. He also said backup generators could help manage demand during critical periods and when operating reserves were low.
Separately, Malaysian Investment Development Authority director of business services and regional operations Noorzita Mohamad Nor told the Nov 10 panel that recent data centre investment approvals had incorporated a 30 per cent local content requirement to create opportunities for domestic manufacturers and service providers, Utusan Malaysia reported.
