Data center operators in Malaysia are reassessing their power options following the implementation of power tariffs in the Southeast Asian country.

The tariff increase, first announced last December and finalized recently, could increase energy costs by between 10 and 14 percent, according to reporting from Reuters.

Data centers with a capacity of more than 100MW will fall into the ultra-high voltage category, which will expose them to the highest tariffs. As a result, these facilities could face an additional $15 million to $20 million in expenditure per annum.

In addition, a further monthly surcharge could also be imposed that would reflect changes in fuel prices and foreign exchange. The Malaysian government has contended that the tariff hikes are necessary in order to boost social spending. In addition, it is seen as a rebalancing of prices, with Malaysia previously using low power prices as a means to attract investment into its data center sector, which has soared over recent years.

Speaking to Reuters, Cheam Tat Inn, managing director of the Malaysian arm of US operator Equinix, said that the new tariff structure means operators of big data centers will now account for a higher share of grid management costs than smaller peers.

"If you are a large data center, then you pay for a bigger share of the infrastructure or distribution network costs," Cheam contended.

To mitigate the impacts of the tariffs, Equinix said that it is considering alternative energy sources to mitigate the impact of the tariffs.

Several operators in the country have turned to onsite renewables to supplement their energy use. Last November, AirTrunk partnered with Pekat Solar to deploy 1MW of rooftop solar at its JHB1 data center campus in Johor Bahru, Malaysia.

Malaysia has become one of the premier data center markets in the APAC region, with power demand from the sector expected to surge to 21 percent by 2027 from seven percent in 2022, according to a report by Bain & Co.

The biggest markets are in Kuala Lumpur, Cyberjaya, and Johor Bahru. Operators in the country include PDG, AirTrunk, Equinix, Keppel, ChinData's Bridge DC, STT GDC, and Yondr.