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# Will new tariff structure crush Malaysia's data centre growth?
- URL: https://www.techstories.co/will-new-tariff-structure-crush-malaysias-data-centre-growth/
- Published: 2025-07-01T18:15:00.000Z
- Updated: 2025-07-05T18:15:26.000Z
- Description: The reasons for the uproar.
- Author: Paul Mah
- Tags: Data Centres

Electricity pricing is up in Malaysia, and data centre operators, stakeholders are in a tizzy over the steep increase. Will it torpedo data centre demand?

### Overhaul of electricity pricing

Malaysia's TNB has introduced new tariff rates for electricity, which kicked in yesterday.

As I wrote last week:

- A complete overhaul of how electricity is charged.
- Voltage-based; impact on heavier users.
- Fuel surcharge reviewed monthly.

To be clear, the tariff was first unveiled in December 2024 and fleshed out in May.

### Data centres pay the price

What's the real-world impact on data centres? Most large data centres are expected to fall in the ultra-high voltage category with the highest tariffs.

This means:

- Data centres in Malaysia may see their bill rise by up to 15% to 20% under this new tariff structure.
- Gary Goh did some calculations and told *The Edge* that it's an additional US$15-20 million annually for a 100MW data centre.

Note that this is excluding a fuel surcharge, currently set at zero. The surcharge reflects fuel prices and will now be reviewed monthly, instead of every 6 months.

### Paying for a sustainable grid

Why the price increase? Why now?

- It's worth noting that Malaysia currently has one of the cheapest electricity costs in ASEAN. Some argue that it's past time for a review and the income funnelled towards boosting social spending.
- Data centre growth has been extraordinary over the last few years. The new tariff structure will see data centre operators account for a higher share of grid management costs.

So why are data centre operators and hyperscalers in Malaysia - the key beneficiaries of the boom - scrambling now?

### Why the uproar?

I did some asking around and here's what I found out from insiders.

1. **Very short notice**

Key details of the tariff structure only emerged in early June, and even then, only to a handful of the largest operators.

Without the ability to calculate the exact impact on their operations, most data centre operators are left blindsided by the sharp increase.

1. **Too much, too soon**

The data centre industry in Malaysia has seen multiple price increases in recent years.

- Rising land costs\*.
- Rising construction costs\*.
- New power tariff (This).
- Service tax from 6% to 8% on July 1st.

*\*Expected*

And:

- Fuel surcharge (0% currently).
- Upcoming water tariff (No details yet).

The top worry right now? 

The price increases could push overall costs into infeasible territory, and drive demand to other markets.