In today’s digital world, the amount of data we produce and consume is growing rapidly. There are over 17 billion internet-connected devices globally, and this year, the world is expected to generate 1.5 times the amount of digital data it did just two years ago. As data mushrooms in size as a commodity, so does the demand for data centres.

Nonetheless, the explosive growth in data centres will cause an equally unprecedented surge in energy consumption – driving mounting concerns over grid reliability and decarbonisation of the energy system. Evolving the grid to sustainably power data centres will be critical for ensuring a digital future that works for both people and planet.

Surging data centres in a rapidly evolving world

Data centres are the backbone of the digital world – housing all the necessary equipment and connections to store, process, and distribute the vast amounts of data created every second of the day. They are the invisible force powering our digital lives and the services we’ve come to depend on – from high-definition video streaming to immersive gaming.

For many years, data centres displayed a remarkably stable appetite for energy, even with increasing workloads. However, the expanding needs of cloud computing and artificial intelligence (AI) workloads more recently have led to substantial increases in power for data centre operations, thereby pushing up against existing grid capacities.

To understand why, consider that a ChatGPT query needs nearly 10 times as much electricity as a typical Google search. This difference explains the coming sea change in how much energy the world consumes in the not-too-distant AI future. Indeed, Goldman Sachs Research estimates global data centre energy demand to grow 160% by 2030.

Along the way, carbon dioxide emissions of data centres may more than double between 2022 and 2030. In addition to consuming large amounts of electricity, data centres also use about 1.1 million gallons of water per day for cooling to prevent overheating from constant operation – the equivalent of daily water usage for a city of 10,000 people.

Preparing for the high energy and water usage by data centres is therefore critical to avoid disruptions to power grids as well as widespread water shortages in areas where data centres will be concentrated. This especially rings true for Malaysia, which has recently emerged as a data centre powerhouse for ASEAN as well as the continent more broadly.

  Preparing for the energy demands of data centres

While most digital infrastructure investments in Asia have traditionally gone to more established markets like Japan, Singapore, and Hong Kong – Malaysia’s abundance of industrial land, coupled with strong investment incentives supported by the government have made the nation a highly attractive destination for new data centre investments.

In fact, Malaysia’s data centre market is on a hockey-stick growth trajectory with a projected size of US$2.25 billion in 2028, a surge of 72% from 2022. Leading Malaysia’s digital transformation, Malaysia Digital Corporation (MDEC) drives the nation’s data centre growth, solidifying Malaysia as a rising hub for digital innovation and infrastructure.

Key hubs like Greater Kuala Lumpur and Johor Bahru are primed for significant expansion – with the latter expected to attract over RM17 billion in data centre investments this year alone. Vantage Data Centre has broken ground on its second Cyberjaya campus (KUL2) which will deliver 256MW of IT capacity supporting cloud adoption and the growth of AI, whilst AirTrunk has also announced its entrance into the Malaysian data centre market with a new 150+MW hyperscale site located in Johor.

Although these investments are poised to uplift Malaysia’s digital economy, potential electricity demand from data centres is expected to hit over 5,000 megawatts (MW) by 2035. Interest in new data centres is even higher, with national electricity utility Tenaga Nasional Berhad (TNB) having received applications for supply exceeding 11,000 MWs.

This represents just over 40% of Peninsular Malaysia’s existing installed power-generation capacity at 27,000 MWs – underscoring the need for urgently ramping up the national grid’s renewable capacity. Otherwise, the massive load growth from data centres runs the risk of slowing the nation’s progress towards its net-zero goals.

Recognising this need, the government is working on proactive system-level approaches to address grid reliability while promoting carbon-free electricity to power data centres. This includes the implementation of an energy and water supply framework for the data centre industry by the Ministry of Energy Transition and Water Transformation (PETRA).

PETRA has also launched the Corporate Renewable Energy Supply Scheme (CRESS), an open grid access concept where third parties can supply or buy green electricity through the grid network system. Meanwhile, the Ministry of Trade and Industry is expected to announce new energy and water efficiency standards for data centres in September 2024.

As Malaysia’s leading power utility, TNB has also embarked on a series of initiatives to provide more efficient, environmentally responsible energy solutions for data centre operators. Just last year, TNB established the Green Lane Pathway featuring fast-track electricity supply offerings, reducing the implementation period from 36 to 48 months to just under 12 months.

As part of the initiative, TNB will also offer tailor-made energy solutions to fulfill all data centre customers’ needs supplied from its wholly-owned subsidiaries that specialise in clean energy – including rooftop solar solutions provider, GSPARX; cooling systems from TNB Engineering Corporation; and green technologies from TNB Renewables.

Transforming the ICT industry to be more energy-efficient

Beyond the energy sector’s capacity to supply sustainable energy, the ICT industry also needs to find new ways to improve its energy efficiency. Currently, total IT load in Malaysia is estimated at about 900 MW in 2024, but this is expected to balloon to about 1,400 MW by 2029, translating to a compound annual growth rate (CAGR) of 8%.

Fortunately, new design techniques alongside AI use to optimize operations hold immense potential for boosting energy efficiency within data centres. Google achieved a 40% reduction in cooling with the help of its DeepMind AI, while Microsoft cut its data centre energy demands by 50% using free-air cooling and ultra-efficient water utilisation.

Meanwhile, small language models (SLMs) have recently emerged as alternatives to large language models (LLMs) like ChatGPT, using only a fraction of the parameters compared to LLMs. As such, they are far less resource-intensive and energy-efficient, while still providing powerful capabilities and high-quality results.

Other promising approaches for the broader IT sector include green coding and green computing, which seek the lowest possible amount of processing power in the design of digital applications. For example, website developers can prioritize reducing file sizes for images to minimize processing needs while delivering their desired results.

Beyond the industry’s energy efficiency, there is also a need to raise energy awareness among IT users themselves so that they better understand the true impact of their energy choices. TNB’s smart meters and myTNB app for instance are empowering Malaysians to reduce their carbon footprint by offering tailored energy management solutions.

Similarly, the Massachusetts Institute of Technology (MIT) is working on creating the equivalent of a home energy report for data processing activities. The university’s approach could become a model for the ICT industry more widely in encouraging their users to measure the environmental impact of data consumption behaviours.

Collaborating for a safe and secure grid of the future

Ultimately, addressing the interlocked concerns of rising data centre growth and energy sustainability will require greater collaboration between the energy sector and the ICT industry to find the right balance that works for all. What’s more, this collaboration needs to happen locally, regionally, and globally – taking into account the critical elements of the energy trilemma and keeping aligned to the world’s net-zero aspirations.

Big, profitable tech companies – now rapidly growing their cloud and AI services – are well-positioned to work intelligently with energy utilities and policymakers to handle rapid data centre load growth in a way that enhances the grid for reliable, resilient, and carbon-free electricity, while simultaneously ensuring last mile digital connectivity.

In doing so, they will set the template for the coming surges in demand from other global megatrends including demand for electric vehicles (EVs), buildings electrification, and renewables technologies. The significant capital that data centre companies are directing to the energy system could be used to scale energy solutions for the future.

Beyond tech companies and energy utilities, there is also a part for all of us to play. Data centres are power-hungry only because our society is also data hungry. As individuals and organisations, we can rein in the data we consume daily and reconsider our digital habits to ensure our shared digital future remains sustainable for all.