The Operational Framework: Data Center Expansion and the Energy Boom
On May 30, 2025, Manila announced the conclusion of the Digital Economy Framework Agreement (DEFA), the first regional agreement for digital governance in ASEAN, which establishes common rules for data transfers, AI, cybersecurity, and talent mobility. This event is not only a regulatory step, but an operational catalyst: the framework has accelerated the installation of new data centers in Malaysia and Indonesia, where the demand for computing power for artificial intelligence has grown by 38% in the first quarter of 2026. The digital infrastructure is expanding at a rate faster than the capacity of green energy generation. In Malaysia, the demand for energy for data centers could reach 30% of the national consumption by 2030, according to a report from May 27, 2025. In the Philippines, the expansion of the sector could cause a 14-fold increase in CO2 emissions compared to 2025. The gap between digital growth and green energy capacity is manifesting in increased pressure on existing power grids.
The growth of data centers is driven by a clear operational mechanism: each new unit of computing power requires a corresponding amount of electrical energy. A medium-sized data center consumes an average of 50 megawatts, equivalent to a small town. The expansion of the sector in ASEAN has led to a demand for energy that exceeds the available renewable generation capacity. The regional energy system is unable to support this growth without resorting to fossil fuels. The most significant data point is that the energy consumption of data centers could reach 15% of the total for the region by 2030, with a direct impact on emissions. The emerging picture is of a system under tension: digital innovation requires energy resources that the current system cannot sustainably provide.
Node engineering: the energy supply chain
Data centers in ASEAN are not just buildings, but complex systems that convert electrical energy into computing power. Their operation depends on an energy supply chain that includes power plants, transmission networks, cooling systems, and backup sources. In Indonesia, Envision Energy’s strategy focuses on developing renewable energy plants in areas with low grid density, where green energy is more abundant. However, the distance between renewable energy sources and data centers increases transmission costs and reduces efficiency. The repair time for a damaged transmission line can be up to 14 days, causing prolonged service interruptions. In addition, server cooling requires large amounts of water, with an average consumption of 10 liters per kilowatt-hour of energy consumed.
Control of this chain is concentrated in a few companies: Envision Energy in Indonesia, Jindalee Lithium in Oregon (which supplies materials for backup batteries), and telecommunications companies such as Singtel and Telkom Indonesia. Ownership of transmission infrastructure is often held by state-owned entities, which operate with outdated technical standards. In Malaysia, 60% of transmission lines were installed before 2000, with an average capacity of 220 kV, insufficient to support the peak demand of data centers. The cost of replacing a transformer is approximately $2.3 million and requires a waiting time of 9 months. This operational slowness creates a structural collapse: demand is growing, but the response capacity is limited.
Who Pays and Who Benefits: A Microeconomic Analysis
The economic benefits of the data center boom are concentrated in a few areas. In Indonesia, Envision Energy’s project in Banten created 1,200 direct jobs and generated a flow of $1.8 billion in investments. However, the costs have been passed on to citizens: the price of electricity in some areas increased by 12% in the first quarter of 2026. In Malaysia, telecommunications companies increased their revenues by 22% thanks to connectivity contracts with data centers. The cost of cooling for an average data center is €4.2 per kilowatt-hour, a cost that is added to the price of electricity.
Companies operating in data centers are not the only ones benefiting. Jindalee Lithium, with the McDermitt project in Oregon, announced a Nasdaq debut in the second half of 2026, with an estimated market value of $1.2 billion. The value of the shares increased by 41% after the announcement of the spin-off plan. At the same time, the supply of renewable energy in Indonesia increased by 18% in 2025, but the demand from data centers exceeded the supply by 1.3 gigawatts. The gap was filled with the use of natural gas power plants, which increased CO2 emissions by 2.1 million tons in the first half of 2026. The costs of managing emissions were passed on to end consumers, with an increase in the price of electricity of €0.03/kWh.
Closure: The Gap Between Narrative and Infrastructure
Public narratives often portray the boom in data centers as a sign of modernity and technological progress. The gap lies in the operational reality: while governments promote digital innovation, energy infrastructures struggle to keep pace. The expansion of the sector has created a structural pressure on electrical grids, with an increased demand that exceeds the capacity of green energy generation. The Impact KPI is a 30% increase in energy demand for data centers in Malaysia by 2030, with a direct impact on emissions and the security of the energy system.
Two monitorable indicators in the coming months are the electrical traffic in the main transmission nodes in Indonesia and the price of electricity in Malaysia. If the price exceeds €0.18/kWh, the system is under stress. If the traffic exceeds 90% of the capacity, there is a risk of blackouts. The system is not in crisis, but is in a phase of transition. Digital growth cannot continue without an upgrade of energy infrastructures. The next step is not deregulation, but strategic investment in grid, renewables, and efficient cooling.
Impact KPI: +30% increase in energy demand for data centers in Malaysia by 2030
Photo by Timelab on Unsplash
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