Turning data centres green
THE Malaysian data centre (DC) market is powering up. By 2029, its capacity is expected to nearly double, reaching 1.36 thousand MW from an estimated 0.71 thousand MW in 2024. That’s a growth rate of 13.73% annually.

There are currently around 48 DCs spread across the country, operated by 22 different providers. This signifies a competitive market with a range of options for businesses seeking DC solutions.

This surge is also reflected in revenue. Colocation services, where companies lease space in DCs, are expected to see a jump from US$838mil (RM3.93bil) in 2024 to a whopping US$2,038.2mil by 2029, growing at an impressive 19.45% each year.

Investment in DCs is gaining momentum due to the country’s strategic location, government support, job creation and growing demand for digital services. As businesses increasingly adopt digital transformation and cloud computing, the DC industry is attracting both domestic and international investments.

Despite the undeniable investment potential, there are significant challenges, including high initial costs, energy consumption, regulatory compliance and intense competition. To maximise benefits and mitigate risks, investors must balance these factors carefully, emphasising sustainability for long-term success.

Malaysia’s booming digital economy relies on DCs, but these facilities gobble up valuable land.

There’s a cost: The land they take up could be used for factories, businesses, or even homes, creating a tough choice for policymakers.

The opportunity cost of dedicating land to these facilities must be meticulously evaluated. Policymakers and urban planners must balance between the economic returns from DCs and the potential advantages of alternative land uses.

DCs are highly energy intensive. The ones in Malaysia require more energy compared to those in cooler climates, primarily due to the need for more intensive cooling systems to maintain optimal temperatures for servers and other IT equipment.

This increases energy consumption and operational costs, making energy-efficient cooling solutions and sustainable practices essential to mitigate environmental impact and optimise energy use.

Planning for their energy needs involves accommodating increased loads and ensuring reliable, uninterrupted power to prevent outages. This includes implementing and incentivising energy-efficient technologies and practices, promoting the adoption of water-efficient cooling technologies, utilising recycled water or alternative water sources, and offering competitive incentives for green technologies.

Adopting green DCs in Malaysia is increasingly becoming a priority for businesses due to the rising importance of sustainability and energy efficiency. By using renewable energy (RE) sources, optimising cooling systems and implementing virtualisation technologies, businesses can lower energy consumption and operational costs, enhancing profitability and competitiveness.

Adopting green practices enhances corporate image, attracts environmentally conscious customers and ensures compliance with stringent environmental regulations, which also reduces carbon footprints, avoids fines and demonstrates corporate responsibility.

This can enhance brand loyalty, drive customer engagement and open new business opportunities.

Green DCs also offer scalability and flexibility, allowing businesses to adjust infrastructure based on demand through virtualisation, cloud computing and modular designs. This adaptability helps businesses respond to market changes and technological advancements.

Optimising infrastructure design, using energy-efficient hardware and employing automation tools can also improve operational efficiency, enhancing data processing speed, reliability and scalability. This boosts performance and productivity.

Malaysia should look into increa- sing its reliance on RE sources like solar and wind power to reduce fossil fuel dependence and environmental impact, and develop smart grid technologies for energy distribution.

Learning from neighbouring countries like Singapore, Malaysia should ensure high infrastructure reliability, offer competitive tax incentives and grants, and encourage research in cooling technologies and energy efficiency. Utilising waste heat recovery systems and fostering government- private sector collaboration can also enhance infrastructure and investment attraction.

Robust cybersecurity standards are necessary to ensure data protection and reliability. Communities should gain from job creation, infrastructure development and corporate social responsibility initiatives.

Several obstacles hinder the adoption and efficacy of green DCs. These include the substantial initial costs, extended periods required for return on investment, complexities in integrating new energy-efficient technologies with current systems, prioritisation of short-term financial gains over long-term sustainability goals and shortages of skilled talent.

A cohesive national strategy with clear policy framework that supports RE and energy efficiency is crucial for sustainable DC operations. Proactive planning, regulatory oversight and collaboration are key to align DC growth with sustainable resource management.

By addressing challenges and fostering innovation in green and energy-efficient technologies, promoting RE and implementing water conservation measures, Malaysia can solidify its position as a leading DC hub, attracting businesses while protecting the environment.

Implementing strategic policies, fostering economic and community benefits, and ensuring transparency and stakeholder engagement will help Malaysia achieve a sustainable and prosperous digital economy.

This article first appeared in Star Biz7 weekly edition.
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To maximise benefits and mitigate risks of data centres, investors must balance the rewards and challenges carefully, emphasising sustainability for long-term success.