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Data Centres: Boom and Backlash
4AUG

Johor operator says it uses no fresh water

1 min read
10:53UTC

ZDATA told Reuters its 300 MW plant at Iskandar Puteri runs solely on treated wastewater, the first named-operator answer since Johor froze approvals for water-intensive projects.

IndustryDeveloping
Key takeaway

ZDATA says its 300 MW Johor site uses only treated wastewater as Malaysian states diverge on rules.

ZDATA, which runs a 300 MW facility at Iskandar Puteri in Johor, told Reuters on 24 July that the site operates solely on treated wastewater, and that it is finalising a renewable supply deal with state utility Tenaga Nasional 1. It is the first named-operator compliance response since Johor halted approvals for water-intensive projects . Johor's build-out target stands at 7,000 MW, eight times its current capacity, on a peninsula that shares its water politics with Singapore next door.

Residents of Iskandar Puteri protested against ZDATA's construction in February over falling water pressure. ZDATA disputes that its site caused it 2. Developer Tropicana Firstwide set up two free car washes in response to complaints about construction dust, which tells you something about the register of the dispute. The residents' account and the operator's are both on the record; the water-pressure question has not been adjudicated by anyone.

Executive councillor Ng Sze Han has set out Selangor's rival approach: a 30 per cent local-content requirement plus energy and water efficiency vetting, rather than Johor's water tiering 3. An operator that clears Johor on wastewater may fail Selangor on supply chains, and vice versa.

Two neighbouring states asking different questions of the same applicants creates an arbitrage rather than a standard. The developer picks the state whose test it already passes, and neither government learns what the other's test would have caught.

Deep Analysis

In plain English

In Malaysia, data centres use huge amounts of water for cooling, which caused problems in Johor, a state that has now paused approving new water-heavy projects. One operator, ZDATA, is trying to show it can comply by saying its data centre only uses treated wastewater rather than fresh water, and that it is arranging a deal with the national electricity company to use more renewable power. It is the first company in Johor to publicly respond this way since the pause began.

Deep Analysis
Escalation

Johor's approval halt has not eased; ZDATA's compliance statement is a company-level response, not a state-level policy change, so other operators without a wastewater-only design remain paused.

What could happen next?
  • Precedent

    ZDATA's wastewater-only claim gives other Johor operators a possible compliance template, if it can be independently verified and replicated at other sites.

  • Meaning

    Johor and Selangor are now testing two different regulatory theories for admitting data centres, one based on water use, the other on local content, within the same country.

First Reported In

Update #12 · Ofgem prices the grid queue by the megawatt

The Star (Reuters)· 4 Aug 2026
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Causes and effects
This Event
Johor operator says it uses no fresh water
Malaysian states are now applying rival admission tests to the same applicants, and operators have begun tailoring their compliance claims to whichever one they face.
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