Johor data centre boom to drive major power demand, stressing grid upgrades
Johor's expanding data centre industry is projected to consume about 30 TWh of electricity each year by 2031, roughly 18 % of Peninsular Malaysia's power supply, highlighting urgent grid capacity needs.
According to BMI, a Fitch Solutions unit, Johor's data centre sector will need about 30 TWh of electricity per year by 2031, representing roughly 18 % of Peninsular Malaysia's total supply and a three-fold increase from one outlet six percent share. The peninsula's power balance is tight because its grid is not linked to the hydropower-rich state of Sarawak, so gas-fired generation is expected to cover most of the new demand.
BMI also projects a net addition of 3.0 GW to Malaysia's thermal capacity between 2029 and 2031, with gas generation rising by 13.6 TWh to 106.7 TWh. Beyond generation, grid connectivity is a critical hurdle; development of physical infrastructure lags behind data centre construction, and demand is concentrated around the Sedenak and Nusajaya Tech Parks where local substations are nearing capacity. Tenaga Nasional Bhd intends to invest RM43 billion in grid upgrades, though such projects typically take five to ten years. Since February 2026, regulators have tightened approval rules for new non-AI data centres, requiring operators to demonstrate self-sufficient power and water supplies, making secured grid access a key determinant of project timelines.
Why it matters
Rising data-centre power needs could strain Malaysia's electricity grid, affecting energy security and economic growth.
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