Data centers accounted for a record 9.3 percent of electricity consumption in Peninsular Malaysia during the second week of August, up from an average of about 7 percent so far in 2026, as hot weather increased cooling demand, Reuters reported Tuesday citing energy officials.
The increase adds another constraint to Malaysia’s rapid data center buildout, which has attracted large cloud and AI infrastructure projects while raising longer-term questions about generation capacity and grid planning.
Cooling demand lifts power use
Energy Commission Chief Executive Siti Safinah Salleh said higher ambient temperatures forced data centers to use more energy for cooling. Hot and dry conditions have also reduced hydroelectric output as dam levels fell.
Malaysia’s Energy Commission estimates that data centers could account for as much as 31 percent of Peninsular Malaysia’s electricity demand by 2035. The upper-end projection illustrates how quickly infrastructure requirements could change if the current pipeline of projects is delivered.
Economy Minister Akmal Nasir said Malaysia will need to add about 9 GW of gas-fired generation capacity by 2032 as it expands electricity supply while retiring coal plants. Malaysia is targeting full retirement of coal-fired generation by 2044.
No near-term shortage expected
Officials nevertheless said the current increase in data center demand remains within planning assumptions and does not point to an immediate power shortage. No new gas-fired generation is expected this year or next year, with authorities looking to optimize the existing fleet through the end of 2027.
The near-term challenge is therefore less about an unexpected surge than about coordinating data center approvals, grid connections and new generation over the next several years.
The issue is becoming more visible as AI projects move into Malaysia. TNGlobal reported Tuesday that Firmus and OpenAI plan two Malaysian AI data center sites, adding to a broader pipeline of cloud and data center investment.
The 9.3 percent August reading also shows that annual averages can understate peak conditions. Cooling requirements rise with temperature, so the same installed computing capacity can place different loads on the power system depending on weather and facility efficiency.
Featured image: İsmail Enes Ayhan on Unsplash
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