Peninsular Malaysia's Gas Generation Rose 28% in December as Data Centre Demand Surges
Gas output jumped 28.4% in December 2025 while data centres are on track to claim 52% of peninsular electricity by 2035, squeezing TNB's capacity plans.
Gas-fired power generation in Peninsular Malaysia rose 28.4% year-on-year in December 2025 as coal-fired output fell 4.3%, according to Malaysia's Grid System Operator, marking one of the sharpest fuel-mix shifts the country's grid has recorded.6
The move has been gathering pace. Data centre consumption tripled its share of total grid demand in the first nine months of 2025, Tenaga Nasional Berhad's investor reporting shows, pushing overall commercial electricity demand up 7.7% year-on-year over that period. By 2035, data centres are projected to account for 52% of Peninsular Malaysia's electricity use, up from roughly 2% as of mid-2025, according to Asian Power analysis published Monday (2026-09-21).6
Gas output had already set a record of 5.54 terawatt-hours in April 2026, Grid System Operator data cited by Reuters showed, while coal generation fell to 6.67 TWh the same month, its steepest decline in more than three years. Power demand across Peninsular Malaysia jumped 11.5% in April 2026 from a year earlier, per the same GSO data.1,2
Meeting that output requires more gas feedstock. Petronas shipped 446,000 tonnes of LNG from offshore fields to Peninsular Malaysia through late May 2026, nearly three times the 150,000 tonnes shipped in all of 2025, Kpler data showed.1 Exports have not been cut: Malaysia simultaneously lifted LNG shipments to international markets by 14.6% from the start of 2026 through May, per Kpler data reviewed by Reuters.2
Tenaga Nasional Berhad's CEO has indicated the utility intends to add 6 to 8 gigawatts of gas-fired capacity by 2030 through new builds and life extensions of existing plants.6 But Southeast Asia's project delivery record gives reason for scepticism. Wood Mackenzie research published on August 9 (2026-08-09) found the region is on course to deliver less than one-third of its planned gas-fired power capacity by 2030, citing a widening gap between government ambitions and project execution.4
The data centre pipeline sharpens that delivery risk. Southeast Asia's data centre capacity is projected to more than triple from 2.8 gigawatts in early September 2026 to 9.4 gigawatts by 2035, with electricity demand from those facilities climbing from 17 terawatt-hours to 57 TWh over the same period, according to Wood Mackenzie.5 "What makes data centre demand interesting from an LNG perspective is the counterparty profile," Fadhlullah Omarali, principal analyst at Wood Mackenzie, said. "These are large, creditworthy off-takers with power needs that remain stable regardless of economic cycles."5
JKM Asian LNG stood at $27.51 per MMBtu on Monday (2026-09-21), the price reference against which any new regional long-term supply negotiations will be benchmarked.
On a longer horizon, Malaysia's renewables build will reduce but not eliminate gas dependence. GlobalData forecasts installed renewable capacity rising to around 31.5 gigawatts by 2035 from 6.9 gigawatts in 2025, with generation climbing to 46.4 TWh from 10.1 TWh, and the country is on course to exceed its 18.43-gigawatt national renewable energy target for 2040 as early as 2031, GlobalData power analyst Sudeshna Sarmah said.3 Renewables intermittency means gas remains the indispensable balancing fuel for data centres requiring around-the-clock supply.
The pressure point closest in time is plant reliability, not planning targets. Asian Power analysis published Monday (2026-09-21) noted Malaysia's existing gas fleet is being asked simultaneously to replace coal as the grid's main baseload source and to back up intermittent renewables — two functions that impose different operating demands on turbines and balance-of-plant equipment.6 TNB is targeting the 2030 window for new capacity, but the Grid System Operator's December 2025 figures suggest existing plants are already running well above historical utilisation rates. How much buffer remains before maintenance intervals shorten and forced outage frequency rises is not yet apparent from public disclosures.6