Data Centers in Johor, Sydney, Melbourne and Batam to Absorb Most Planned Power Generation, BMI Warns

Data centers across four key Asian hubs—Johor, Sydney, Melbourne and Batam—could consume the bulk of additional electricity generation planned for their respective markets over the coming years, raising concerns over power availability as cloud computing and artificial intelligence workloads continue to expand, according to a report from BMI Country Risk and Industry Research released last Thursday.

BMI said Johor would face the tightest electricity supply balance, followed by Sydney and Melbourne, while planned generation growth in Batam should broadly support its data center pipeline. However, securing grid connections is emerging as a bigger constraint than headline generation figures suggest, as electricity infrastructure struggles to keep pace with development and regulators impose stricter requirements on new projects.

The analysis shows that data center utilization rates, rather than power usage effectiveness, will be the main determinant of electricity demand. While planned generation could meet demand under BMI's base-case scenario, little capacity would remain for households, industrial users and electrification initiatives.

Johor's data center capacity is expected to expand significantly, with 825 megawatts of live capacity currently and another 3.9 gigawatts expected over the next three to five years, including publicly disclosed facilities built by cloud service providers. By comparison, Sydney and Melbourne have a combined 1.76 gigawatts of live capacity with another 3.6 gigawatts expected, while Batam has 70 megawatts of live capacity and a further 747 megawatts in the pipeline. BMI's technology team forecasts live data center capacity in Malaysia to increase from 1.6 gigawatts to 1.9 gigawatts between 2026 and 2030, while Indonesia's capacity is projected to rise from 1.1 gigawatts to 1.2 gigawatts, though these forecasts exclude self-built facilities operated by Microsoft, Amazon and Google due to limited publicly disclosed data.

Major developments include YTL's 1.2-gigawatt data center campus in Johor, with 300 megawatts expected to become operational by the first quarter of 2027. In Sydney, Equinix's 504-megawatt campus includes its own 720MVA substation, while NEXTDC began construction of its 350-megawatt S4 facility in March 2026. In Batam, DayOne, Firmus Technologies and Nvidia began building a 360-megawatt campus in June 2026.

Under BMI's base-case utilization scenario, new data center capacity in Johor could require about 30 terawatt-hours of electricity annually by 2031, accounting for around 18 percent of Peninsular Malaysia's electricity supply, compared with 6 percent in 2026. This would absorb more than 90 percent of the net additional electricity generation BMI forecasts for Peninsular Malaysia over the same period, leaving limited room for other sources of demand growth. The supply challenge is compounded by the fact that Peninsular Malaysia's electricity grid is not connected to Sarawak, where much of Malaysia's hydropower expansion is expected to take place.

In Australia, data centers are expected to account for about 10 percent of national electricity consumption and absorb 84 percent of additional generation over the next five years, even as the country transitions toward renewable energy while retiring coal-fired power plants. Sydney and Melbourne remain attractive data center locations because of their connectivity, population centers, enterprise demand and subsea cable infrastructure, though higher electricity costs and limited grid capacity could make project locations increasingly difficult to secure.

Batam's data center sector benefits from its proximity to Singapore, with sub-five-millisecond connectivity and access to more than 15 operational and planned subsea cables. The island is attracting demand spilling over from Singapore, including cost-sensitive deployments and workloads requiring local data storage. Data centers could account for more than half of Batam's electricity consumption, absorbing 89 percent of additional generation. However, DayOne's Kabil campus has contracted about 450 megawatts, equivalent to half of Batam's current installed capacity, and BMI estimates the island's data center pipeline could reach 747 megawatts by 2031, exceeding the state utility PLN's projected data center demand of 605 megawatts for the Batam system by 2034.

BMI warned that physical grid infrastructure and access to connections could prove more restrictive than headline electricity supply figures suggest. In Johor, overall grid utilization is estimated at about 30 percent, but demand is concentrated in locations such as Sedenak and Nusajaya where local substations are becoming constraints. Tenaga Nasional Bhd plans to invest MYR 43 billion ($10.53 billion) in grid upgrades, although major projects typically take five to 10 years to complete. Malaysia has also tightened requirements for new data centers, with operators facing restrictions on approvals for non-AI facilities and requirements to demonstrate access to power and water supplies. In October 2026, the trade minister said investors would bear the cost of transmission upgrades and pay for allocated grid capacity even if it was not fully utilized.

In Australia, the Australian Energy Market Operator's 2026 Integrated System Plan calls for about 6,000 kilometers of new transmission lines, while line costs have risen by 25 percent to 55 percent. Developers are increasingly investing in their own substations or considering locations west of Sydney where grid capacity is more readily available. Batam faces a more fundamental constraint because its isolated grid cannot draw electricity from Indonesia's wider power system during periods of tight supply; at full load, the island's data center pipeline could require about 1 gigawatt of electricity, exceeding its existing installed generating capacity.

BMI expects grid access to remain a major constraint on data center development across the four hubs. Projects with secured power connections, committed tenants and sufficient financing are more likely to proceed on schedule, while those without confirmed electricity access face greater delays. As a result, a significant portion of the announced data center pipeline could come online later than currently planned, even as demand for AI training and inference continues to expand.