Malaysia requires data centers to source 30% renewable power

Malaysia's government approved rules requiring data center operators to source at least 30% of their power from renewable sources, Deputy Prime Minister Datuk Seri Fadillah Yusof told a parliamentary session, Data Center Dynamics reported.

Operators have been encouraged to deploy renewable generation onsite, with solar highlighted in particular. The Energy Commission is drafting the framework and guidelines that will set the mechanism for ensuring the 30% requirement is met, according to Yusof, so there is no compliance test yet for developers to work to.

For developers and their lenders, the 30% requirement is now an approval condition, not an operating cost to be managed later. The Data Centre Task Force approved 5GW of additional capacity last month conditional on the threshold, against roughly 8.3GW of data center capacity in the country's interconnection pipeline. That puts the renewable supply contract on the critical path alongside grid connection, which suggests it needs to be secured before financial close.

The mandate rests on the Corporate Renewable Energy Supply Scheme, or CRESS, which offers open grid access so a third party can supply or buy electricity through the grid network for a set system access charge. Renewable supply agreements with data centers have been signed under the mechanism, most recently in June, when DayOne agreed a 1.5GW renewable deal with utility TNB.

Malaysia's main data center hubs are Cyberjaya, Johor and Kuala Lumpur. Developers already active in the country include PDG, AirTrunk, Equinix, Keppel, Bridge DC and Vantage.

The guidelines now in drafting will set the mechanism that determines what a developer has to show to qualify for the capacity already approved on the 30% condition.