Malaysia's government has approved a requirement for data centers to source at least 30 percent of their power from renewable energy. Deputy Prime Minister Datuk Seri Fadillah Yusof told the Dewan Rakyat on October 27 that the rule Editorial news feature photo illustrating Malaysia's 30 percent renewable energy requirement for data centers.applies to a data center's total capacity or its energy consumption, Bernama reported.
Fadillah, who is also energy transition and water transformation minister, announced the decision while winding up the Budget 2027 debate. "The Energy Commission is developing a comprehensive framework and guidelines on self-generation facilities and the requirement for data centres to use at least 30% renewable energy," Fadillah said, The Edge Malaysia reported.
The Energy Commission is drafting the mechanism for meeting the threshold. Operators can comply through the Corporate Renewable Energy Supply Scheme (CRESS), which lets renewable energy developers sell electricity to corporate buyers over the national grid, or through the Solar for Self-Consumption initiative. Fadillah said in a written parliamentary reply that data center projects had secured approval for 12.3GW of electricity supply capacity as of August, with maximum demand from the sector projected to reach 8.39GW by 2030, The Star reported.
Fadillah also encouraged operators to generate their own electricity from solar so that the cost of meeting the industry's demand is not shifted to other consumers. "This approach aims to increase the use of self-generated energy by the data centre sector while reducing its full dependence on electricity supplied by the national grid," Fadillah said. Data centers should also have backup generators that can be used for demand control when operating reserves are low, he said, Malay Mail reported.
The deputy prime minister addressed the cost of grid access under CRESS. He said the system access charge payable by renewable energy developers remains at 14 sen per kilowatt-hour, and that green electricity users pay a separate 4 sen per kilowatt-hour charge. The two should not be combined and reported as an 18 sen per kilowatt-hour fee, The Edge Malaysia reported.
Malaysia's Data Centre Task Force approved 5GW of additional capacity last month on condition that the renewable energy requirement is met, ETDatacenters reported. The outlet put that capacity at about 60 percent of the 8.3GW project pipeline recorded as of June, citing a bank source.
Baxtel tracks 199 data center facilities in Malaysia, operated by 69 providers. Johor accounts for 84 of them, with 24 under construction, and the largest site in the country is YTL's JDC1 at 72MW in Kulai.
The Energy Commission is still developing the framework and guidelines, which cover self-generation facilities as well as the renewable energy requirement. Projects must reach commercial operation by December 31, 2028 to qualify for the 14 sen per kilowatt-hour CRESS system access charge.
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