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Malaysia is set to increase its gas-fired power generation capacity by up to 50% by the end of this decade, in a major energy expansion strategy aimed at meeting the surging electricity demands driven by data centres. According to an industry official speaking at the Energy Asia conference, the country plans to add between 6 and 8 gigawatts (GW) of gas-fired capacity by 2030.
This bold move reflects Malaysia’s rapidly evolving digital economy and its emergence as a key regional hub for data infrastructure. Industry forecasts indicate that Malaysia will witness the fastest rise in data centre-related electricity demand across Southeast Asia. The share of power consumed by data centres in Malaysia is projected to jump from 7% in 2022 to 21% by 2027 — effectively tripling in just five years.
Experts suggest that this trend is being driven by several factors, including cloud computing, artificial intelligence (AI), fintech, and growing digital connectivity requirements from both domestic and global tech firms. This has prompted urgent discussions around energy infrastructure scalability, sustainability, and long-term security.
A Balancing Act for Energy Policy
Datuk Tengku Muhammad Taufik, President and CEO of national oil and gas company Petronas, told delegates at the conference that while Malaysia remains the world’s fifth-largest exporter of liquefied natural gas (LNG), the rising domestic demand for gas could significantly alter its export trajectory.
“In four to five years, Malaysia may shift from being a net LNG exporter to potentially having to import LNG to meet local needs,” he said, emphasizing the scale of the energy transformation taking place.
This shift underscores the delicate balance Malaysia must strike between maintaining its export obligations and ensuring domestic energy sufficiency, particularly as the government works to attract global tech giants to set up data operations in the country.
Implications for Regional Energy and Tech Markets
Malaysia’s expansion of its gas-fired power infrastructure may ripple through Southeast Asia’s energy and tech ecosystems. By bolstering its energy base, Malaysia positions itself as a more attractive destination for hyperscale data centres, particularly as neighbouring countries like Singapore enforce tighter energy efficiency regulations and land constraints.
Environmentalists have voiced concern, however, over the climate impact of increasing fossil fuel use. While natural gas is considered a cleaner-burning fossil fuel compared to coal, it still contributes to greenhouse gas emissions. The government has maintained that the gas expansion is a transitional solution and is being pursued alongside renewable energy investments.
Energy analysts expect Malaysia’s energy policy to increasingly hinge on hybrid models combining conventional gas-fired generation with solar, hydrogen, and carbon capture technologies to meet both economic and environmental goals.
Conclusion
Malaysia’s planned ramp-up of gas-fired power plants marks a pivotal moment in the country’s energy and digital growth trajectory. As it navigates complex trade-offs between energy security, economic competitiveness, and environmental stewardship, the world will be watching how Southeast Asia’s emerging digital leader powers its future.
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