Malaysia Approves a 30% Renewable Energy Minimum for Data Centres

Malaysia will require data centres to draw at least 30% of their energy from renewable sources. Fadillah Yusof, the Minister of Energy Transition and Water Transformation, told the Dewan Rakyat that the government “telah meluluskan” (has approved) a minimum of 30% renewable energy “of total capacity or energy use” for data centres, according to the Hansard for 27 October. He repeated the same words in answer to a question the next day, recorded in the Hansard for 28 October.

His ministry, known as PETRA, listed the rule in its official summary on X: “at least 30% renewable energy for the data centre sector”, alongside incentives for self-generation and the Corporate Renewable Energy Supply Scheme (CRESS), which lets companies buy green power directly.

The rule is not yet written down in detail. According to the minister, the Energy Commission (Suruhanjaya Tenaga) “is developing a comprehensive framework and guidelines” on self-generation and the 30% requirement for the sector. No start date, compliance method or penalty has been published, and it is not yet clear whether the rule covers existing sites as well as new ones.

How the 30% rule fits Malaysia’s data-centre checks

Data centres already face a two-stage review before they get a power supply. Fadillah said every application is first assessed by an Energy Focus Group run by the Energy Commission. It then goes to the Data Centre Task Force (DCTF), run jointly by the investment and digital ministries. The assessment looks at whether the grid can carry the load, the transmission and distribution network, and the infrastructure investment needed.

To stop the cost of new grid capacity being shifted onto other users, operators are being encouraged to build their own generation, mainly solar for their own use, without exporting surplus power to the national grid. Data centres must also have backup generators that can be called on for demand control when the grid is under strain and operating reserves are low, the minister said on 28 October.

For the grid itself, Fadillah said Tenaga Nasional Berhad (TNB) has approved capital spending of RM43bn for 2025 to 2027 to strengthen the network, with about RM12bn of it expected in 2027.

Water limits for new sites

Water got the same treatment. Answering Wan Ahmad Fayhsal, the MP for Machang, Fadillah said areas with low water reserve margins “will not be considered” for data-centre development, subject to the rules in force. Under water-supply guidelines, data centres must hold storage tanks on site with at least two days of their own use. The national water regulator, SPAN, also requires water operators and developers to look at alternative water for cooling, including recycled water and rainwater harvesting.

27 projects and 4,053 planned jobs

Winding up for the Digital Ministry on 28 October, Minister Gobind Singh Deo said the DCTF, set up in February 2025, has approved 27 data-centre projects with an estimated investment of RM225.97bn. Approved projects must meet a minimum of 30% local content, which the investment agency MIDA monitors through reports every six months.

Gobind said the projects are expected to create 4,053 jobs, including 3,523 high-skilled posts in electrical and mechanical engineering, networking and cyber security, and data-centre operations. About 89% of the high-skilled posts are expected to be filled by Malaysians. These are planned figures, not people hired. The same numbers appeared in a written parliamentary reply reported by The Star on 14 October.

Big projects are already moving. TSN has covered DayOne’s RM30bn financing in Johor and Bridge Data Centres’ reported loan plans, and the Budget 2027 plan for a sovereign AI cloud.

Contracted power runs well ahead of real use

This is TSN’s analysis. The most useful number in the debate was not the 30%. Asked whether data centres threaten households’ supply, Fadillah said that as of August 2026 data centres had contracted 2,346MW of electricity but were actually using about 1,374MW, “only 58.5 per cent”. He said operators often overestimate their needs when they apply, and that the task force now checks real demand in detail.

That gap matters for planning. If the grid is built around contracted figures, other customers may end up paying for capacity that sits idle. If it is built around today’s use, it could fall short when the halls fill up. Malaysia is answering with a mix of screening, self-generation and backup generators. The UK has gone a similar way, setting five tests data centres must pass for faster grid connections.

A 30% floor with the definition still open

The rule’s wording leaves an important choice to the Energy Commission. “Total capacity or energy use” are not the same thing. Thirty per cent of installed capacity could be met with solar panels that produce far less than 30% of the power a site consumes over a year, because solar only generates in daylight. Thirty per cent of energy use is a much harder target for a site running around the clock. The guidelines will also need to say how CRESS purchases count, and how the rule is checked. Until those details are published, the 30% is a direction of travel rather than a measurable standard.

Sources

• Dewan Rakyat Hansard, 27 October 2026 (unrevised), pp.132-133
• Dewan Rakyat Hansard, 28 October 2026 (unrevised), pp.6-9 and 132-133
• Ministry of Energy Transition and Water Transformation (@PETRAMalaysia), X thread summary, 28 October 2026
• Jabatan Penerangan Malaysia (@JPenerangan), X post on data-centre guidelines, 28 October 2026

Related stories

• Seven Lenders Add RM15bn to DayOne’s Johor Data-Centre Financing, Taking It to RM30bn
• Malaysia Plans a Sovereign AI Cloud Run by MCMC, With No Cost or Date
• UK Sets Five Tests Data Centres Must Pass for Faster Grid Connections