Johor's data centres could consume 40% electricity demand by 2035, says WoodMac

KUALA LUMPUR (June 19): Scottish-based global data and analytics company Wood Mackenzie (WoodMac) warns that Johor’s data centre projects could consume 40% of the state’s electricity demands by 2035, an increase of around 24%, putting pressure on the state’s grid infrastructure to keep up with demand.

“The issue is increasingly about where power is available rather than whether it is available," said Alvin Tan, research analyst for power and renewables at WoodMac, in a report titled 'Powering Johor's Data Centre Boom: Supply, Demand, and Grid Constraints'.

"Areas attracting the highest concentration of data centre investment are also where grid infrastructure is under the greatest pressure, making transmission and distribution readiness a key determinant of future growth,” Tan said.

Ever since Singapore’s pause on data centre projects between 2019 and 2022, Johor became the new data centre hub of the region, reaching a power capacity of around 3.8 gigawatts (GW) in September, almost one and a half times the state’s current electricity demand.

Furthermore, initiatives like the Johor-Singapore Special Economic Zone, streamlined approvals through Malaysia’s National Data Centre Framework, and Tenaga Nasional Bhd’s (KL:TENAGA) Green Lane Pathway are significantly reducing grid connection timelines and qualifying projects, which Tan warned could lead to data centre projects outpacing grid supply readiness.

As of 2025, Johor was reported to have 27 data centre projects, with a large pipeline of around 50 as of April 2025.

The report highlighted that Johor currently has about 6.8GW of installed generation capacity, primarily sourced from natural gas and coal. This could become an issue as Malaysia transitions towards green energy, with 2.1GW of coal-fired power plants expected to retire in the 2030s as part of the New Energy Transition Roadmap.

Potential solutions, according to the report, are stronger on-site substations, the deployment of decentralised solar generators, and the long-term development of dedicated renewable energy infrastructure for data centres.

Additionally, it noted Malaysia's NewGen26 programme, an open tender for 6-8GW of new gas-fired generation capacity, as critical to maintain long-term reliability and support for future industrial growth.

The Southern Johor Renewable Energy Corridor is also expected to play an important role in the state's energy mix. Planned projects in Mersing and Kota Tinggi within this energy corridor could add four gigawatts-peak of solar capacity integrated with battery storage, helping offset the impact of future coal retirement.

“The question now is whether infrastructure planning can stay ahead of a pipeline that is growing faster than almost anywhere else in Southeast Asia,” said Tan. “Delays in substations, transmission upgrades or new generation projects could ultimately become the limiting factor on future expansion.”

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