Johor data centres may consume 40% of power demand by 2035

Grid access, rather than overall generation capacity, is emerging as the main constraint on further expansion.

Data centres could account for around 40% of Johor’s end-user electricity consumption by 2035, up from about 24% today, according to Wood Mackenzie.

The state’s data centre load more than doubled between 2024 and 2025, with Johor now accounting for an estimated 51% of total data centre maximum demand across Peninsular Malaysia.

Wood Mackenzie estimated Johor’s data centre maximum demand at about 3.8 gigawatt (GW), equivalent to nearly one-and-a-half times the state’s current electricity demand.

Johor has attracted MYR165b, or about US$42b, in cumulative investment from hyperscalers and technology companies, supported by its proximity to Singapore, competitive operating costs, and favourable policies.

The report said power generation remains sufficient to support near-term growth. Johor has about 6.8 GW of installed generation capacity, mainly from natural gas and coal-fired plants, against the current electricity demand of around 2.6 GW.

However, grid infrastructure is emerging as the main bottleneck, as data centre demand becomes concentrated around areas such as Sedenak Tech Park and Nusajaya Tech Park.

Wood Mackenzie identified shortages of 132 kilovolt (kV) main intake substations and limited suitable grid injection points, particularly for renewable energy integration, as the most immediate challenges.

Potential solutions include higher-voltage 275 kV connections supported by on-site substations, decentralised solar generation for self-consumption, and dedicated renewable energy infrastructure for data centre clusters.

Longer-term supply risks are also expected to emerge as about 2.1 GW of Johor’s coal-fired generation capacity is retired during the mid-2030s.

Wood Mackenzie said Malaysia’s NewGen26 programme, an open tender for 6 GW to 8 GW of new gas-fired capacity, will be important for maintaining long-term reliability and supporting industrial growth.

The Southern Johor Renewable Energy Corridor could also add up to 4 GWp of solar capacity integrated with battery storage, helping offset the impact of future coal plant retirements.

Renewable energy procurement is already rising. As of June 2025, 1.3 GW of Corporate Renewable Energy Supply Scheme agreements had been signed in Peninsular Malaysia, all linked to data centre projects in Johor.