There has been several engagement sessions held between the Ministry of Investment, Trade and Industry (MITI), various government agencies and data centre industry players in efforts to finalise sustainable development guidelines for data centres in Malaysia.
According to MITI minister Tengku Datuk Seri Zafrul Abdul Aziz, the guidelines include metrics such as Power Usage Effectiveness (PUE), Water Usage Effectiveness (WUE) and Carbon Usage Effectiveness to measure energy, water efficiency and carbon emissions from data centres.
“The guidelines are being finalised and will be one of the requirements for incentive applications for future data centre investments,” Tengku Zafrul said, adding that the government encourages the implementation of green technology policies and the use of renewable energy (RE) in data centre operations to achieve the 70% RE target by 2050, as outlined in the National Energy Transition Roadmap (NETR).
The minister also noted that the Corporate RE supply Scheme (CRESS) is being implemented to facilitate access for data centre operators to RE sources generated by third parties.
“CRESS will facilitate and enable more data centres to benefit from RE, making the operational costs of the centres more competitive in the long term,” he added.
Meanwhile, a Fitch Solutions company, BMI believes that the implementation of a sustainability-linked regulatory framework could catalyse data centre developments in regions beyond Cyberjaya and Johor, such as Kedah, as investors seek to tap into new areas for digital hubs.
At the same time, it could create a scenario where the emerging regions either benefit from demand spillover from major markets evolve into new digital hubs.
However, this strategy requires a higher risk tolerance, as investors may need to commit capital even when demand may not materialise immediately in these regions.
Kedah shares similar characteristics with Malaysia’s major markets before they became saturated, making it an attractive option for investors. Its strategic location enables it to capitalise on the submarine cables that run in Southern Thailand. Additionally, real estate private equity firm, Area Group has also begun construction of a data centre campus in the state.
“Investment into this area comes amidst above-average power, water and connectivity infrastructure presence, hedging against the potential introduction of regulation aimed at enforcing sustainability-linked standards for the domestic data centre industry.
“These are likely to be contributing factors to the movement of investment away from saturated domestic sub-markets such as Johor,” BMI stated.
The first phase of the data centre campus will have an estimated gross development value (GDV) of US$2.4 billion and the entire 63 hectares, upon completion, will have a GDV of US$15 billion.
Nevertheless, BMI still believes Johor will continue to be the leader in Malaysia in terms of upcoming information technology (IT) (critical power) load, with 268.5MW of live capacity.
There are approximately 507MW of capacity under construction and another 921MW planned for delivery over the long term. However, it noted that flooding is a key environmental risk, posing a threat to the timeliness and cost implications of projects within the region.
“It is noteworthy that flooding is a large risk in many parts of Malaysia, but investors may be enticed by the lack of structural constraints compared to the most saturated markets,” BMI said.
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