Regional Data Center: Johor data centres could account for 40% of electricity demand by 2035, Wood Mackenzie says

By Romel S. Gurky

Data centres could account for about 40% of Johor's total electricity demand by 2035 as rapid investment in digital infrastructure increases pressure on the state's transmission and distribution network, according to a report by Wood Mackenzie.

The report, Powering Johor's Data Centre Boom: Supply, Demand, and Grid Constraints, said Johor has attracted cumulative investments of MYR165 billion (US$42 billion) from hyperscalers and technology companies, driven by its proximity to Singapore, competitive operating costs and supportive government policies.

Wood Mackenzie estimates Johor's data centre maximum demand has reached about 3.8 gigawatts (GW), more than double the level recorded between 2024 and 2025 and equivalent to nearly one and a half times the state's current electricity demand of 2.6 GW. Data centres currently account for about 24% of Johor's end user electricity consumption.

Despite Johor having about 6.8 GW of installed generation capacity, largely supplied by natural gas and coal fired power plants and supported by interconnection with the Peninsular Malaysia grid, the report said transmission and distribution infrastructure, rather than generation capacity, has become the primary constraint for new projects.

Grid bottlenecks are emerging around major data centre clusters, particularly at Sedenak Tech Park and Nusajaya Tech Park, where shortages of 132 kilovolt substations and suitable grid connection points are slowing development. Wood Mackenzie said potential solutions include expanding 275 kV grid connections, deploying on site solar generation and developing dedicated renewable energy infrastructure to serve data centre clusters.

The report also highlighted longer term supply challenges as about 2.1 GW of coal fired generation capacity in Johor is scheduled to retire in the mid 2030s, while electricity demand across Peninsular Malaysia continues to grow.

Wood Mackenzie said Malaysia's NewGen25 programme is expected to maintain near term reserve margins by extending the operation of selected gas fired power plants, while the NewGen26 programme, which will tender 6 GW to 8 GW of new gas fired generation capacity, will be important to maintaining long term system reliability after coal plant retirements.

The report added that the Southern Johor Renewable Energy Corridor is expected to contribute up to 4 GWp of solar capacity integrated with battery storage from 2031, helping offset the loss of coal fired generation and diversify the state's electricity supply.

As of June 2025, corporate renewable energy supply agreements covering 1.3 GW had been signed in Peninsular Malaysia, all linked to data centre projects in Johor.

Alvin Tan, research analyst for power and renewables at Wood Mackenzie, said the principal challenge for Johor is increasingly the availability of grid infrastructure rather than power supply, adding that delays in substations, transmission upgrades or new generation projects could limit future data centre expansion.

Editing by Alexander Ginting