{
  "id": 16563494,
  "title": "Malaysia well positioned to play key role as regional data centre hub: Moody's Ratings",
  "url": "https://urgent.news/2026/10/26/malaysia-well-positioned-to-play-key-role-as-regional-data-centre-hub",
  "topic": "tech",
  "section": "Tech",
  "published": "2026-10-26T04:07:14.000Z",
  "source": {
    "name": "New Straits Times",
    "slug": "new-straits-times",
    "url": "https://www.nst.com.my/business/economy/2026/10/1563739/malaysia-well-positioned-play-key-role-regional-data-centre-hub"
  },
  "original_language": "en",
  "account": "KUALA LUMPUR: Malaysia possesses advantageous qualities to become a vital regional data centre hub, according to Moody's Ratings. The country's competitive edge lies in its affordable and readily available power supply, complemented by supportive government policies. Chelsia Ng, Moody's assistant vice president for ratings, highlighted that Malaysia's regulatory environment already prioritizes data centre efficiency. The Digital Ecosystem Acceleration (DESAC) scheme offers tax incentives contingent on power and water efficiency standards, which are mandatory for project approvals in Johor, the major data centre hub. This approach aims to optimize resource utilization, potentially mitigating the strain on power and water infrastructure as the sector expands. The rating agency projects a need for 14 to 17 gigawatts (GW) of additional generation capacity by 2035 in Peninsular Malaysia, which could require investments ranging from RM80 billion to RM95 billion by Tenaga Nasional Bhd (TNB) and independent power producers. While data centre-driven demand growth is anticipated to benefit utilities in the long run, the significant capital expenditures pose execution and funding risks, potentially increasing financial leverage during the development stage. According to government projections, data centres could consume up to 31% of total electricity in Peninsular Malaysia by 2035, up from 4.0% in 2025, underscoring the sector's substantial impact on electricity demand. Ng emphasized that a stable baseload power supply will remain crucial to accommodate data centre power needs, reinforcing gas's role as a transitional fuel while Malaysia scales up solar capacity and battery energy storage systems (BESS) to ensure grid reliability. The acquisition of new or extended gas-fired capacity under NewGen25 and NewGen26 further underscores gas's importance in maintaining system reliability as electricity demand rises. However, Malaysia faces the dual challenge of phasing down coal generation and replacing retiring capacity over the next decade, which will introduce additional investment and execution risks in the energy transition process. Ng noted that renewable energy sources, such as solar power, could supplement the additional electricity demand, particularly if deployed swiftly due to its relatively quick deployment timeline. Data centre operators are increasingly setting their own net-zero and decarbonisation targets, potentially driving demand for renewable energy-linked power procurement over time. Although solar energy currently represents a small portion of Peninsular Malaysia's generation mix, the recent mandatory inclusion of battery energy storage systems (BESS) in the large-scale solar (LSS) tender program indicates a growing role for solar-plus-storage solutions. However, the intermittent nature of renewable energy sources and current battery storage technology may not sufficiently support data centers' round-the-clock power requirements in the medium term. In June, the Malaysian government announced that all future solar power projects under the sixth LSS program must incorporate BESS to strengthen grid stability alongside renewable energy expansion. Moody's Ratings also mentioned that data centre-driven demand growth will be credit positive for utilities over the long term, but the substantial capital investments associated with these projects will entail execution and funding risks, potentially elevating financial leverage during the development phase. For TNB, annual capital spending is projected to rise to approximately RM18 billion, primarily driven by increased investments in grid infrastructure and generation capacity. Although TNB's regulated transmission and distribution investments are backed by a cost-recovery framework that sustains revenue growth, unregulated generation projects present higher risks due to their lengthy construction timelines before generating cash flow. Nevertheless, Moody's Ratings expects TNB to possess sufficient financial flexibility to handle significant capital expenditures over the medium term.",
  "summary": "KUALA LUMPUR: Malaysia is well positioned to play a key role as a regional data centre hub if it can maintain its competitive advantage, Moody’s Ratings said.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "Malay Mail",
        "title": "Moody’s sees Malaysia as key regional data centre hub if edge maintained",
        "url": "https://urgent.news/2026/10/26/moodys-sees-malaysia-as-key-regional-data-centre-hub-if-edge",
        "published": "2026-10-26T03:47:28.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}