MALAYSIA IS BETTING ON DATA CENTERS TO BOOST ITS ECONOMY. BUT EXPERTS WARN THEY COME AT A PRICE

Winson Lau has always had contingency plans. But he wasn't prepared for data centers.

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Lau relies on water and electricity to operate his thriving export business in Malaysia's Johor province, where he raises a kaleidoscope of tropical fish in rows of aquariums, including albino fish with red spots that can fetch up to $10,000 from collectors. His contingency plans in the event of an outage involve an intricate system of purifying wastewater through friendly bacteria and an alarm system to quickly switch to backup power.

But these measures can't compete with the gigantic, power-guzzling and thirsty data centers being built in Johor. The province is on track to have at least 1.6 gigawatts of data centers at any given moment from nearly nothing in 2019, making it the fastest-growing data center market in Southeast Asia, according to a report published in April.

Data centers are large, windowless buildings filled with racks of computers that need lots of electricity. To prevent overheating, they rely on energy-intensive air conditioning systems using pumped water. Increasingly used by tech companies for running artificial intelligence systems, the power demand from future facilities in Malaysia may rise to over 5 gigawatts by 2035, according to researchers at Malaysia's Kenanga Investment Bank. This is more than half of Malaysia's entire renewable capacity in 2023.

Over 95% of the energy available to Malaysia in 2022 was from fossil fuels, according to the International Energy Agency. The country is now fifth-largest exporter of liquefied natural gas globally. And with planned renewable projects, Prime Minister Anwar Ibrahim said in September that the country was "confident of a surplus of energy" to fuel large projects and keep exporting.