Malaysia’s Data Centre Framework To Tackle Water Use With Dedicated Tariff

KUALA LUMPUR, Sept 17 (Bernama) — A dedicated water tariff for data centres (DCs) is among the measures expected to be introduced in the National Sustainable Data Centre Framework, slated to be launched next month, says Hong Leong Investment Bank Bhd (HLIB).

In a note today, the investment bank said the Ministry of Energy Transition and Water Transformation (PETRA) has agreed to set a specific tariff of RM5.50 per cubic metre (m³), replacing the current industrial rate.

“This reflects the sector’s heavy reliance on water for cooling and is intended to encourage more efficient usage.

“Policy measures are likely to promote the adoption of recycled water and district cooling systems, reducing reliance on potable water and aligning Malaysia with global best practices in sustainable cooling,” it said.

It added that the business case for reclaimed water is further strengthened by recent infrastructure investments, such as the large-scale reclaimed water supply network in Ulu Tiram, Johor.

With freshwater tariffs rising, operators will have stronger economic incentives to connect to reclaimed water systems, ensuring both long-term sustainability and cost competitiveness, it noted.

The investment bank also said that Malaysia has already introduced the Corporate Green Power Programme (CGPP), enabling large users to secure long-term renewable energy (RE) supply through virtual power purchase agreements.

Building on this, the new framework could require DCs to progressively increase their renewable share, potentially mandating that new facilities source at least 30 per cent of their load from RE by 2030.

“The forthcoming National DC Framework is likely to codify these shifts into binding requirements. Explicit RE sourcing obligations, combined with water conservation measures, will push operators toward more sustainable practices.

“Importantly, these policies also align with Malaysia’s national energy and climate goals: lifting RE’s share in the generation mix to 40 per cent by 2035 and achieving net zero emissions by 2050,” it added.

If effectively implemented, HLIB said the framework would lower the baseline carbon usage effectiveness of Malaysian DCs, narrow the gap with global best-in-class operators, and reinforce Malaysia’s positioning as a competitive green DC hub in Southeast Asia.

This evolution reflects a broader regional trend where sustainability has become not just a compliance requirement but a differentiator in attracting international investment, it said.

— BERNAMA

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