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Data Centres: Boom and Backlash
28JUN

Malaysia urged to halt data centres

2 min read
12:23UTC

Suaram director Kua Kia Soong called on 26 June for a halt to new Malaysian data centres until citizens' electricity is guaranteed, with the sector now holding 43% of national utility TNB's contracted capacity.

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Key takeaway

A rights group wants new Malaysian data centres frozen as the sector locks up 43% of national grid power.

Kua Kia Soong, director of the Malaysian rights group Suaram, called publicly on 26 June for a moratorium on new data centres until citizens' electricity needs are guaranteed 1. Malaysian data centres already hold 5.9 GW (gigawatts) of contracted grid capacity across 38 projects, equal to 43% of the total contracted capacity of TNB (Tenaga Nasional Berhad), the national electricity utility.

A single sector holding 43% of a national utility's contracted power is what turns a build-out into a political fight. In the southern state of Johor, the densest cluster, authorities have already rejected roughly 30% of applications over water and electricity limits. The moratorium call does not bind anyone, but it puts a number on how far data-centre demand has crowded into the grid that households also draw from.

Malaysia is following a path other constrained jurisdictions have taken this year. Johor first halted new approvals in April after the country's first water-rights protest , and grids from Denmark to Ireland have paused large-load connections rather than let compute crowd out domestic demand. Whether the federal government acts, or leaves the brake to Johor's state authorities, will decide if the call has teeth.

Deep Analysis

In plain English

TNB (Tenaga Nasional Berhad) is Malaysia's national electricity company, the equivalent of a state utility. It supplies power to homes, businesses, and, increasingly, data centres across the country. Data centres now have contracts for 5.9 GW (gigawatts) of electricity from TNB, which equals 43% of the company's total committed power supply. That is a very high concentration: one industry has reserved nearly half of what the national utility can supply. Kua Kia Soong, director of Suaram (Suara Rakyat Malaysia), a Malaysian human rights organisation, called publicly on 26 June for the government to stop approving new data centres until Malaysian households' electricity needs are guaranteed first. Malaysia keeps household electricity prices very low through government subsidies. When data centres consume a large share of the grid, there is less power available for households, and the subsidy cost rises. Johor, the Malaysian state closest to Singapore that has attracted much of the data-centre boom, has already rejected about 30% of data-centre applications over electricity and water constraints.

Deep Analysis
Root Causes

Malaysia's data-centre concentration in Johor and Selangor reflects two structural choices that are now in conflict.

First, Malaysia's government explicitly positioned data centres as a high-value foreign-investment substitute for lower-margin electronics manufacturing, setting generous electricity subsidies through TNB (Tenaga Nasional Berhad, the national utility) to attract hyperscalers. The subsidy created a cost advantage that made Malaysia competitive with Singapore; it also created an electricity-capacity commitment that TNB cannot easily reverse without breaking existing commercial agreements.

Second, Malaysia subsidises domestic electricity prices for households at approximately MYR 0.22 per kWh (about $0.05/kWh), among the lowest residential rates in Southeast Asia. The subsidy is politically non-negotiable; it was a founding commitment of Malaysian energy policy and has survived multiple governments.

When data centres consume 43% of TNB's contracted capacity at rates near cost-recovery, the household subsidy becomes fiscally unsustainable without either raising domestic tariffs or capping new data-centre connections, the dilemma Suaram's Kua Kia Soong is surfacing publicly.

Escalation

A single civil-society director calling for a moratorium does not yet constitute a political majority, but the 43% TNB-capacity figure gives the argument quantitative force that resonates in a country where electricity access remains a welfare measure rather than a market commodity.

The Johor rejection rate of 30% suggests local planning authorities are already applying an informal capacity cap that a formal national moratorium would merely codify. The direction is toward tighter approvals, not reversal, over a 12-18 month horizon.

What could happen next?
  • Risk

    If Malaysian authorities formalise a moratorium or hard capacity cap at the national level, roughly 2-3 GW of data-centre projects currently in the Johor and Selangor approval pipeline face cancellation, redirecting capital to Indonesia or Thailand.

  • Consequence

    TNB's 43% data-centre capacity concentration exposes Malaysia to a single-sector demand shock: if hyperscalers redirect expansion to India or Indonesia over the next two years, TNB's high-tariff commercial load declines while household subsidy obligations remain, worsening the utility's fiscal position.

Sources:Free Malaysia Today
Mentions:Malaysia →Johor →Singapore →Ireland →Denmark →Suaram →TNB →
First Reported In

Update #8 · Data centres build their own power plants

Free Malaysia Today· 28 Jun 2026
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