Why is Johor rejecting 30 per cent of new data centre applications?

Johor has rejected almost 30 per cent of data centre applications since June. Is Johor finally saying "no" to data centres?

Just got back from a restful holiday trip with my family and a short break from posting daily.

I want to address a news report by the Straits Times (ST) published last week: "Johor rejects nearly 30% of data centre applications to protect local resources."

From the headlines, it might seem that Johor is clamping down on new data centres. Here's what it really means.

The growth is way too fast

I've written often about Johor's incredible data centre growth. But it's hard for the man on the street to visualise the sheer scale.

Let's break it down using the data from the ST report, which noted that there were 14 applications for new data centres since June - of which 4 got rejected (28.5%).

• That's 28 new data centres annually.
• Singapore has over 90 data centres.
• But these were built over the last decade.

But even this doesn't offer enough context.

Assuming a conservative 50MW for each data centre in Johor, we are looking at 700MW (14 x 50) of new applications. Over a mere 6 months.

In comparison, Singapore has just 1,400MW of data centres, and it is currently one of the largest data centre hubs in this part of the world.

Does "too fast" come to your mind now?

Sustainability is now a major concern

Sustainability is surely a concern. After all, data centres are profligate users of energy to power servers around the clock and water to keep them cooled.

Talk of sustainability has grown steadily louder over the last year.

Multiple government agencies are working hard to craft guidelines to regulate the data centre industry, looking at:

• PUE.
• WUE (Water Usage Effectiveness).
• CUE (Carbon Usage Effectiveness).

The reason is simple.

Johor has massive untapped renewables and water. However, the optics matter, and any energy or water shortage would be very bad politically.

Some of the proposed data centres could be at locations where there is no water surplus or where the grid is under strain.

It's a once-a-generation opportunity

Will Johor close the door on new data centres? Definitely not.

As I wrote previously, this once-in-a-generation opportunity that will cement Johor's role as a key data centre hub in the Asia Pacific.

As a nation, Malaysia would surely want to leverage it to the hilt:

• Grow its semiconductors industry.
• Supply data centre components locally.
• Propel the growth of its renewables industry.

So yes, Johor can afford to be choosy now. But keep the data centre applications coming.