KUALA LUMPUR, Dec 20 — Malaysia is racing to attract more data centres, including hyperscale facilities to power AI, cloud services and streaming. But it’s doing so in a decade that scientists say will be significantly hotter than the one the industry was designed for.

The World Meteorological Organisation’s latest outlook projects that for every year between 2025 and 2029, the global average near-surface temperature is likely to be 1.2-1.9 degrees Celsius higher than in the pre-industrial period (1850-1900).

There is an 80 percent chance that at least one of those years will be hotter than 2024, which is already the warmest year on record. There's also an 86 percent chance that at least one year will spike more than 1.5 degrees Celsius above pre-industrial levels.

In that hotter world, data centres are not just bigger and more numerous. They are also more exposed to heat extremes, and to the costs and risks that come with keeping thousands of servers cool.

When Data Centres Overheat

Data centres run around the clock. Almost all the electricity that powers their servers eventually turns into heat. If that heat isn’t removed quickly enough, equipment starts to throttle to protect itself, performance drops, and in the worst cases systems shut down.

To minimise that risk, the American Society of Heating, Refrigerating and Air-Conditioning Engineers (Ashrae) recommends a typical ambient temperature of around 18-27 degrees Celsius for most modern IT equipment. That’s a narrow operating comfort zone when outside air is in the mid-30s and humidity is high.

The risks are not theoretical. In 2022, the United Kingdom experienced heatwaves that surpassed 40 degrees Celsius. During that period, data centres for Google and Oracle in London were knocked offline for hours after their cooling systems struggled to operate in the record-breaking temperatures. Websites in Europe and the US that were hosted in their cloud-based services experienced hours of downtime as a result.

A few months later, in September 2022, another data centre outage took place this time in the United States. Twitter (now X) lost a key data centre in Sacramento, California, during an intense heatwave. An internal memo from the company’s then vice-president of engineering described a "total shutdown of physical equipment” at the facility due to "extreme weather”, after temperatures in the city soared to as high as 47 degrees Celsius. Traffic had to be shifted to data centres in other states to avoid disruption.

These incidents did not occur in small or poorly built facilities. They show how, as heatwaves push past design assumptions, cooling can become a single point of failure even in highly redundant systems.

Heat, Humidity and the "Tropical Penalty”

Malaysia is already hot and humid. Its average daily temperature typically hovers around 31-33 degrees Celsius, with nights usually between 21-24 degrees Celsius. Relative humidity often sits near 80 percent.

Climate projections in Malaysia’s National Climate Change Policy 2.0 indicate that average annual temperatures in the country are likely to rise by roughly 1 - 1.5 degrees Celsius by 2050. By 2100, this could rise to 1.7 - 2.1 degrees Celsius, intensifying heat stress and water demand. During that time, Sabah and Sarawak are expected to face temperature increases larger than they had ever experienced.

On top of that long-term warming trend, the Malaysian Meteorological Department’s (MetMalaysia) recent bulletins show how often the country now swings into intense hot spells. During the 2025 southwest monsoon season, the department forecasted less rain and hotter conditions across much of the country.

Multiple Level 1 heatwave alerts - defined as maximum daily temperatures of 35-37 degrees Celsius recorded for at least three consecutive days - were issued in the states of Perak, Selangor, Kelantan, Kedah, Pahang, Sabah and Sarawak.

On July 29, 2025, a Level 2 heatwave alert was issued for Kota Marudu in Sabah, indicating maximum daily temperatures of 37-40 degrees Celsius for at least three consecutive days.

For most people, that translates into stuffier nights, reminders to conserve water and hazy skies. For data centres, it means cooling systems face relentless heat and humidity from the moment the day begins. In some places, there is little rainfall to ease the burden, yet the systems must keep servers in that 18-27 degrees Celsius band.

“Unlike temperate regions where free cooling using outside air is available for much of the year, Malaysian data centres must rely on mechanical cooling year-round,” sustainability engineer CK Tang tells Garasi Bernama. "That means we miss out on the seasonal energy savings that data centres get in cooler climates.”

The main challenge in Malaysia, Tang adds, is minimising energy use in a tropical climate while still maintaining strict temperature and humidity control, as recommended by Ashrae standards.

In other words, there is a "tropical penalty”. The physics of heat and humidity don’t stop data centres from operating in Malaysia, but they do make cooling more energy-intensive and shrink the safety margin when heatwaves arrive.

And inside a server hall, it’s not just temperature that matters. Humidity does, too.

“Elevated temperatures may shorten equipment lifespan, degrade performance, and increase energy consumption,” explains Tang, who also heads the Green Building Index Data Centre Tool Development Committee.

“High humidity can lead to condensation risks, while low humidity can increase static discharge risks - both of which can cause system failures. Reliable environmental control is essential to ensure hardware longevity and operational stability.”

Modern servers are more robust than their predecessors. Many are rated to operate safely above Ashrae’s recommended band for short periods, and some data centres — especially newer hyperscale facilities — deliberately run closer to 27 degrees Celsius to save energy.

But doing that safely in a place like Malaysia means designing cooling systems with very tight control over both temperature and humidity, and being honest about how much risk operators are willing to take.

Cooling is Also About Water

Many large data centres use chilled-water systems and cooling towers. Water circulates through heat exchangers to absorb heat from the servers, then releases that heat outside the building. In cooling towers and other evaporative systems, a portion of the water is deliberately evaporated to carry heat away and must constantly be replaced with fresh water.

The World Economic Forum estimates that extreme heat, drought and other climate hazards could push global data centre operating costs up by about US$81 billion (about RM332.9 billion) a year by 2035, and US$168 billion (about RM690 billion) a year by 2065.

Over the longer term, the extra running costs for data centres could total around US$3.3 trillion (about RM13.6 trillion) by 2055.

Malaysia has already seen first-hand what prolonged dry spells can do to its water system. The strong El Nino of 1998 contributed to drought conditions that helped trigger the 1998 Klang Valley water crisis, when reservoir levels fell and rationing hit about 1.8 million residents for 150 days. In 2014, another hot, dry spell combined with infrastructure issues pushed several Selangor dams to critical levels, again leading to large-scale water rationing.

“We must remember that we have been hit by El Nino and the devastating impact it’s had on our water supply,” says S. Piarapakaran, who is the President of Malaysia’s Association of Water and Energy Research (AWER).

“So, keeping taps flowing while ensuring investors’ needs are also met is an important responsibility.”

Concerns about securing enough water for data centre cooling are no longer just theoretical in Malaysia.

In November 2025, the Johor state government announced it would no longer approve Tier 1 and Tier 2 data centres, which it classifies as high water users, saying these facilities can consume up to 50 million litres of water a day. Instead, Johor plans to steer new investments towards projects in the Tier 3 and Tier 4 category, which use about 200,000 litres of water a day.

Taken together, these episodes and policy shifts show that water for cooling is no longer guaranteed, shaping how Malaysia measures and regulates water use in the data centre sector.

Measuring Efficiency: WUE and Malaysia’s Targets

To understand how much water a data centre uses relative to the work it does, the industry often turns to Water Usage Effectiveness (WUE).

WUE compares the total amount of water a facility consumes - mostly for cooling - with the energy used by its IT equipment, and is usually expressed in cubic metres per megawatt-hour (m³/MWh).

A lower WUE means more water-efficient operations. In theory, a WUE close to zero would indicate minimal water use.

Malaysia’s Ministry of Investment, Trade and Industry (Miti) recommends that data centres maintain a design WUE of 2.2 m³/MWh, aiming to improve it to 2.0 m³/MWh over the next decade.

The same guidelines advise avoiding water-stressed locations in Peninsular Malaysia by locating facilities in areas where the Water Stress Index (WSI) is below 0.8.

(The WSI compares how much water is being used to how much is naturally available. A WSI above 0.5 signals high water stress, meaning water demand is approaching or exceeding what the environment can sustainably provide.)

The National Water Services Commission (SPAN) is also tightening rules around how data centres draw and use water. Its new Water Supply Guidelines for Data Centre Development, which came into effect on September 1, 2025, requires data centre developers, owners and operators to submit detailed water-supply plans, including daily demand estimates split between domestic use and cooling. It also wants them to prioritise reclaimed water over treated drinking water wherever possible.

The guidelines mandate calculating WUE using the ISO/IEC 30134-9 standard, with a cap of 2.2 m³/MWh. It also requires a long-term plan to reduce this further through more efficient cooling systems and the use of alternative sources such as recycled or harvested water.

New data centre projects must include at least two days’ worth of internal water storage, and in some cases an additional external service reservoir with at least one day’s worth of storage, as directed by SPAN. Separate tanks and sub-metering for domestic and cooling systems are also required, so that water used for cooling can be closely monitored and managed.

Designing for a Hotter Malaysia

As Malaysia leans into its role as a data centre hub, the question is no longer whether facilities can operate in a hot, humid climate - but how smartly they are designed to do so.

For Tang, the key is not to see heat and water constraints as a deal-breaker, but as conditions that good engineering must work with from the start.

“Water-based cooling solutions generally offer better energy efficiency due to their ability to achieve lower temperatures,” he says.

In Malaysia’s climate, however, that efficiency benefit can come with high absolute water use if systems rely heavily on evaporative cooling and if operators run facilities at older, colder set-points.

Here, he argues, design choices matter as much as geography. Newer facilities can combine multiple strategies:

• Running closer to the upper end of Ashrae’s recommended temperature range to reduce energy use for cooling.
• Using air-cooled chillers or dry coolers and high-efficiency heat exchangers wherever possible.
• Deploying liquid cooling technologies - such as direct-to-chip cold plates or immersion systems using dielectric fluids - to remove heat more efficiently from high-density racks, especially AI servers, while significantly reducing, and in some designs almost eliminating, on-site water use.

In parallel, using treated or recycled water in carefully engineered closed-loop systems can reduce pressure on potable supplies, provided water quality is properly managed to avoid scaling and corrosion.

“When properly designed, modern cooling systems can achieve excellent energy and water efficiency, even in consistently hot and humid environments like Malaysia’s. The key is engineering systems based on local climate conditions, advanced thermal modelling, and appropriate technology selection,” Tang says. "Poor performance in such climates is typically the result of suboptimal design, not climatic limitations.”

Piarapakaran adds that coolant technology itself will be a key lever in the years ahead. If governments and operators treat cooling innovation as a shared priority - rather than leaving it to individual facility owners - they can steer the market towards next-generation coolants and system designs that deliver the same reliability with less water and energy.

Because in the end, the future of Malaysia’s data centre boom may hinge on a simple question: how efficiently can it stay cool? — Bernama