Kuala lumpur: The Dewan Negara was told today that domestic water tariffs will not be raised solely to meet the demands of data centre development. Deputy Energy Transition and Water Transformation Minister Akmal Nasrullah Mohd Nasir stated that the government has decided costs related to upgrading electricity and water grid infrastructure to support data centres will be fully borne by the developers, ensuring no additional financial burden on consumers, particularly domestic users.
According to BERNAMA News Agency, the development of data centres and the projected rise in electricity demand in Peninsular Malaysia require significant grid enhancement works under the Fourth Regulatory Period (RP4), scheduled from January 1, 2025, to December 31, 2027. This follows the committed demand of over 7,000 megawatts (MW) already secured through Electricity Supply Agreements (ESA) between data centre operators and Tenaga Nasional Berhad (TNB), in addition to completed projects, as of September 2025.
Akmal Nasrullah explained the government's introduction of a 'user pays' approach under the new tariff structure, requiring data centre operators to bear the additional costs of strengthening grid infrastructure. This measure ensures that such expenses are not passed on to other consumers. He addressed this during the oral question session at the Dewan Negara, in response to Senator Datuk Rosni Sohar's inquiry regarding the government's assessment of the impact of the growing number of data centres on national energy and water consumption, and assurances that tariffs would not burden the public or negatively affect the domestic economy.
Further, the government has introduced a dedicated Ultra High Voltage (UHV) tariff category for data centres operating at high and extra-high voltage levels to ensure a stable and sustainable electricity supply for their operations. The minister noted that water consumption for cooling systems and server operations has also increased with the growth of large-scale data centres. To address this, a sustainable water supply management strategy is being implemented to ensure the sector's demand does not affect domestic users or other industries.
The National Water Services Commission (SPAN) has introduced Water Supply Guidelines for Data Centre Development, effective September 1, 2025, outlining the technical requirements from planning to operational phases, including adherence to ISO and IEC standards. Data centre operators are encouraged to adopt green technologies, such as high-efficiency cooling systems, reusable water applications, rainwater harvesting, and water recycling through the Cycle of Concentration, to reduce reliance on treated water and support the sustainability agenda.
Responding to a supplementary question from Senator Dr. Jufitri Joha regarding public concerns over groundwater usage for a data centre project in Port Dickson, Akmal Nasrullah clarified that groundwater extraction falls under state jurisdiction, and any objections or issues should be directed to the relevant state authority.