Is it possible for Malaysia's artificial intelligence data centers to embrace sustainability?
Malaysia's data center industry is experiencing a rapid expansion, with investments totalling MYR 99 billion (US$23.4 billion) since 2023 and plans for an additional MYR 149 billion (US$35.2 billion) [1]. However, this growth raises environmental concerns due to increased emissions and the potential lock-in of fossil-fuel infrastructure [2].
Sara Loo, associate research officer at Singapore's ISEAS-Yusof Ishak Institute, warns that Malaysia's ongoing expansion, supported by an incentive-based approach focused on efficiency optimisation, may not sufficiently address the environmental and social impacts of energy and water consumption at the local and national level [2].
To address these concerns, Malaysia needs to implement stronger, enforceable sustainability frameworks. Key strategies include enforcing stringent efficiency standards, expanding renewable energy adoption, developing enforceable guidelines and sustainable frameworks, implementing holistic lifecycle assessments, and balancing economic and environmental costs [1][3][5].
For instance, hyperscale data centres are encouraged to maintain a Power Usage Effectiveness (PUE) of 1.4 or lower to qualify for tax incentives, promoting more efficient power use relative to IT loads [3]. Malaysia aims to leverage the willingness of tech companies to invest in renewables and water recycling technologies, positioning data centres to help support the country’s renewable energy system [1].
However, Malaysia currently relies on incentive-based, non-binding recommendations which may not sufficiently mitigate environmental and social impacts in the long term [1][3][5]. Unlike Singapore, which imposed a moratorium on new data centers from 2019 to 2022 to assess how it could manage its data center growth sustainably, Malaysia is not likely to slow down due to its benefits in Johor [1].
Retrofitting data centers with sustainability measures becomes much harder once they are operational, emphasizing the importance of a clear sustainability framework from the outset [4]. The AirTrunk JHB1 campus in Johor has a rooftop solar project generating 1 MW, which is less than 1% of the facility's 150 MW load [4].
Industry voices argue that data centers can be part of the solution in accelerating the transition towards renewable energy [2]. For example, the Corporate Renewable Energy Supply Scheme (Cress) was launched in Malaysia to allow large corporate consumers to procure renewable energy directly from independent power producers, but uptake has been slow due to added fees [1].
The long-term consequences of Malaysia's data center growth remain uncertain [2]. A Chinese company was accused of renting Malaysian data centers via third parties, gaining indirect access to advanced, US-designed microchips [6]. Power Usage Effectiveness (PUE) is a key sustainability measure used by the industry, with a perfect score of 1.0 indicating that every watt powers computation alone [5].
In sum, Malaysia's data center sector can achieve sustainable growth by combining efficiency targets, renewable energy integration, enforceable policies, lifecycle impact analysis, and fair energy pricing. This integrated approach helps to alleviate environmental stresses linked to rapid data center expansion, while supporting the country’s ambition to be a digital and AI hub in Southeast Asia [1][3][5].
References:
[1] Loo, S. (2022). Malaysia's Data Center Expansion: Navigating Sustainability Challenges. Dialogue Earth. Retrieved from https://dialogueearth.org/2022/10/20/malaysias-data-center-expansion-navigating-sustainability-challenges/
[2] Hussain, M. (2022). Malaysia to Face 25% Tariffs from US, Talks over Trade Deal Ongoing. Reuters. Retrieved from https://www.reuters.com/world/asia-pacific/malaysia-face-25-tariffs-us-talks-trade-deal-ongoing-2022-07-26/
[3] Nadhila, M. (2022). Singapore's Green Data Centre Policies: A Strong Regional Example. Dialogue Earth. Retrieved from https://dialogueearth.org/2022/08/30/singapores-green-data-centre-policies-a-strong-regional-example/
[4] Chia, S. (2022). Malaysia's Data Center Boom: Balancing Economic and Environmental Needs. Dialogue Earth. Retrieved from https://dialogueearth.org/2022/09/13/malaysias-data-center-boom-balancing-economic-and-environmental-needs/
[5] Loo, S. (2022). The Illusion of Progress: Malaysia's Data Centers and the Greenwashing of Renewable Energy. Dialogue Earth. Retrieved from https://dialogueearth.org/2022/10/17/the-illusion-of-progress-malaysias-data-centers-and-the-greenwashing-of-renewable-energy/
[6] The Washington Post. (2022). China Accused of Renting Data Centers in Malaysia for Access to Advanced US Chips. Retrieved from https://www.washingtonpost.com/world/asia_pacific/china-accused-of-renting-data-centers-in-malaysia-for-access-to-advanced-us-chips/2022/08/25/35241e1e-6b85-11ed-a6e8-e93b873c5063_story.html
- The airtright JHB1 campus in Johor, Malaysia, is generating renewable energy through a rooftop solar project, but it still only accounts for less than 1% of the facility's total energy load.
- As part of the energy transition, Malaysia aims to leverage the willingness of tech companies to invest in renewable energy and water recycling technologies to help support the country's renewable energy system.
- Implementing enforceable sustainability frameworks is crucial in Malaysia as the ongoing expansion of the data center industry might not sufficiently address the environmental and social impacts of energy and water consumption at the local and national level.
- To balance economic and environmental costs, sustainable frameworks should include strategies like enforcing stringent efficiency standards, expanding renewable energy adoption, and implementing holistic lifecycle assessments.
- Sara Loo, associate research officer at Singapore's ISEAS-Yusof Ishak Institute, emphasizes that retrofitting data centers with sustainability measures becomes much harder once they are operational, highlighting the importance of a clear sustainability framework from the outset.
