Data centres: Strategic trade-offs and the promise of high-value jobs
02 Jan 2025
As artificial intelligence (AI) and generative AI gain mainstream traction, there is growing enthusiasm about establishing data centres worldwide to store and process the data fuelling these technologies. In 2023, the global data centre market was valued at US$219 billion, and is projected to grow to US$585 billion by 2032. This represents a 2.7-fold increase, with a compound annual growth rate of 12%, making data centres a significant economic catalyst.
Between 2021 and 2023, Malaysia attracted RM115 billion (US$27 billion, based on an exchange rate of 4.32) in investments from prominent stakeholders to establish data centres in the country. These investments are expected to create 2,325 new high-value jobs (for example, data scientists, cybersecurity analysts and network engineers). Once all committed data centres are fully operational, their combined capacity is expected to reach 3,200mw.
However, as the saying goes, “there’s no free lunch”. Let’s delve into what Malaysia needs to trade for these investments and the anticipated high-value jobs.
Our valuable land
Land is an essential resource for building data centres. For example, Yondr Group’s 300mw hyperscale data centre campus will be established in Sedenak Tech Park, a 745-acre site. Similarly, GDS Holdings Ltd’s hyperscale data centre campus and Equinix’s IBX JH1 will be set up in Nusajaya Tech Park, covering 509 acres of land in total. Additionally, the YTL-Nvidia collaboration to develop AI infrastructure will be located in the YTL Green Data Centre Campus, with 275 acres of the total 1,640-acre land designated for data centre development.
If all the data centres in Malaysia were to operate as green data centres powered by renewable energy (for example, solar power), even more land would be required for solar panel farms to supply this energy. For example, at the YTL Green Data Centre Campus, only about 17% of its 1,640-acre site is allocated for data centres, while the remaining 83% (about 1,361 acres) is likely to be designated for the solar panel farm. According to Hisham Mustaffa, a former chief engineer at Tenaga Nasional Bhd, generating 1mw of solar energy requires roughly 10 acres of land (see ESG, The Edge, Issue 1532, July 15, 2024). Therefore, the 1,361 acres of YTL Green Data Centre Campus may be insufficient to support a 500mw solar panel farm.
Assuming all the committed data centres currently under construction in Malaysia — aggregating 3,200mw — were powered by solar energy, about 32,000 acres would be needed for solar farms. For perspective, 32,000 acres is equivalent to 11% of Kuala Lumpur’s total land area.
Our precious water
Both data centres and solar panel farms require substantial water resources for their operations. In this part of the world, air cooling is not feasible, making water cooling the go-to solution for managing server heat.
According to datacentrereview.com, a 500mw data centre consumes around 13 billion litres (or 13 million cu m) of water annually for cooling. Extrapolating from this, data centres with a combined capacity of 3,200mw (that is, assuming all adopt water cooling) would require roughly 83 million cu m of water each year.
Although solar panels do not need water to generate electricity, they require periodic cleaning to maintain efficiency. According to estimates from the 550mw Desert Sunlight Project, each panel requires around 2.5 litres of water per cleaning cycle, with two cleanings needed per year. While the water demand for solar panel farms is considerably lower than data centres, it still adds up.
For perspective, it needs around 10,000 solar panels to produce 1mw of electricity. A 500mw solar farm, therefore, consists of five million solar panels. For a total capacity of 3,200mw, this translates into 32 million panels. These 32 million panels would require about 0.16 million cu m of water annually for cleaning.
While Malaysia benefits from an annual rainfall averaging 3,000mm that provides about 900 million cu m of water, however, this resource is not evenly distributed, with some states experiencing droughts and water shortages. Hence, the water requirements for data centres and solar panel farms must be carefully managed to ensure long-term sustainability.
The promise of high-value jobs
While part of the RM115 billion investment is indeed allocated to construction and development jobs, these are indirect jobs that only last through the construction phase of data centres. The real promise of high-value jobs are those with roles directly related to the operation of the data centres. Specifically, these roles include IT operation personnel such as server managers, network engineers, cybersecurity analysts, software programmers and similar positions.
“So, how many high-value jobs will a data centre create?” A quick answer often given is, “It depends”, largely on the scale of the data centre and the degree of automation implemented. To avoid leaving readers in limbo, additional research was conducted to form pragmatic assumptions. For instance, a 500mw data centre campus could accommodate around 33 operators (that is, assuming a 15mw capacity per operator). In return, these operators would require a collective workforce of about 726 to 1,023 employees. Of this collective workforce, 198 to 330 are in IT operations.
Applying the same assumptions, an aggregate total capacity of 3,200mw could accommodate around 213 operators and create between 1,278 and 2,130 high-value jobs. While these figures fall short of the reported 2,325 new high-value jobs, it is important to note that the calculation is based on an average operator capacity of 15mw, an arbitrary figure. If we adjust the assumption to an average operator capacity of 10mw, the number of operators that the 3,200mw capacity facility can accommodate would rise to 320, thereby increasing the number of high-value jobs. In other words, the anticipated 2,325 high-value jobs in the data centre sector appear achievable under the revised assumption.
In summation
The RM115 billion investment in data centres presents a strategic trade-off. It requires significant resources, including valuable land — particularly for solar-powered data centres — and water, which is essential for temperature control and maintaining the efficiency of solar farms. In return, this investment stimulates the economy during the initial development phase and is expected to create 2,325 high-value jobs to support their operation. While the high-value jobs directly linked to data centres may be limited, the greater potential for job creation lies in the downstream segments of the data centre value chain.
Dr Lim Kok Tiong is a financial economist, credit and climate risk specialist, seasoned project/programme manager and independent researcher
Source: The Edge Malaysia
