The convergence of artificial intelligence (AI) and the rising tide of data sovereignty is reshaping the global energy landscape, prompting significant investments in power infrastructure. This shift isn’t limited to renewable energy; it encompasses a broader spectrum of energy technologies. In Malaysia, the energy demand from data centers is projected to surge by an astonishing 11 gigawatts (GW)—the equivalent of about 11 nuclear power plants. This figure, derived from applications to Tenaga Nasional Bhd, highlights the urgency of meeting escalating energy needs, especially as Malaysia grapples with a peak demand of 20.07 GW recorded in July.
Ramesh Singaram, president and CEO of GE Vernova’s gas power for Asia, emphasizes a critical point: “What you have to do first is electrify. You cannot say you will decarbonise first.” This statement underscores the foundational necessity of ensuring energy supply before embarking on ambitious decarbonization efforts. The current power grid is not equipped to handle an abrupt influx of energy from intermittent renewable sources. The fluctuations inherent in renewable energy generation can lead to imbalances, requiring the grid to either cut demand or curtail renewable supply. To avoid these pitfalls, significant investments in grid infrastructure are essential.
With over RM114 billion in approved investments in data centers and cloud-related projects from 2021 to 2023, Malaysia is emerging as a hotspot for data center investments in Asia. Its strategic location within the resource-rich ASEAN region, coupled with its potential for green energy, makes it an attractive destination for energy-hungry data centers. Even Japan, known for its developed electricity market, is witnessing growth in its energy sector to accommodate the demands of data centers and semiconductor manufacturers.
The urgency for energy is palpable. GE Vernova reports a backlog of orders for its modular gas turbines and electrical systems, driven by the rising demand for energy solutions. In the first half of 2023, the company recorded a net income of US$1.16 billion on revenues of US$15.46 billion, with a significant portion of that revenue stemming from gas and hydro power. Ramesh notes, “We haven’t really seen the impact of AI [on the energy industry], but it’s coming.” This sentiment hints at a future where AI could be a game-changer across multiple sectors, including energy.
Looking ahead, Malaysia aims for a renewable energy generation mix of 31% by 2025 and 40% by 2035. However, Tenaga’s recent statements indicate that RM45 billion in investments will be necessary to enhance the power grid infrastructure from 2025 to 2027. This need for infrastructure development is reflected in the Corporate Renewable Energy Supply Scheme (CRESS), which requires participants to pay a premium to access the grid, ensuring that the necessary upgrades can accommodate the influx of renewable energy.
Ramesh articulates the cyclical nature of this process: “You have to electrify—build the infrastructure and allow more RE to come in—and repeat.” This iterative approach is crucial for Malaysia to leverage its abundant renewable resources, such as solar and hydro, while also utilizing its established natural gas value chain. The role of natural gas is pivotal, not merely as a transition fuel but as a potential long-term solution, especially with advancements in gas turbine technology that can adapt to cleaner fuel sources like hydrogen.
While Malaysia is exploring various avenues, including hydrogen and nuclear power, it faces the reality that these technologies will take time to mature. The country is positioning itself as a leader in energy transition technologies in ASEAN, but the transition will not be instantaneous. Ramesh highlights, “It would take more than 10 years” for a nuclear plant to become operational due to stringent planning and approval processes.
In the evolving energy landscape, the interplay between AI, data demands, and the need for robust infrastructure will shape the future. As Malaysia continues its journey toward a cleaner energy future, the emphasis on electrification and infrastructure development will be paramount. The energy sector is on the brink of transformation, and those who adapt swiftly will undoubtedly be the ones to thrive in this new paradigm.
