RM15bil Grid Upgrade in Budget 2027 and the Data Centre Power Review: What It Means for Factory Electricity

Key Takeaways

• Budget 2027 allocates RM15 billion to strengthen the national grid, which Tenaga Nasional Bhd (TNB) says is part of its RM43 billion investment for the 2025 to 2027 period to modernise the grid.
• The upgrades are meant to support the digital economy, artificial intelligence and large data centres, the same grid that factories draw power from.
• At the same time, the government told the Dewan Rakyat it is reviewing data centre power demand because requested capacity is higher than actual consumption.
• For factory owners and tenants, the practical issues are supply capacity at a site, how long a new or upgraded connection takes, and whether to add rooftop solar.
• Schemes such as CRESS and the Green Electricity Tariff let manufacturers buy renewable electricity, which matters for exporters facing carbon rules.

What was announced

In a statement on 11 October 2026 reported by Bernama through the New Straits Times, TNB said the RM15 billion for the national grid highlighted in Budget 2027 will raise the capacity of the country's electricity supply system to meet growing demand. The utility said the allocation is part of its RM43 billion investment for the 2025 to 2027 period to strengthen and modernise the National Grid.

TNB said the upgrades will also support the growth of the digital economy and artificial intelligence, which need a stable electricity supply, including for the operation of large data centres. Through the Green Lane Pathway, the company said it is helping to streamline and speed up the development of electricity supply infrastructure for data centre projects.

TNB president and chief executive officer Datuk Seri Shamsul Ahmad said the priority is to ensure every household enjoys a safe and reliable supply while giving businesses the energy they need to grow. The company also reaffirmed the National Energy Transition Roadmap and its aim of 70 per cent renewable energy generation capacity by 2050, through large solar projects, battery energy storage and hydro upgrades.

The data centre power review

Two days later, on 13 October 2026, Deputy Minister in the Ministry of Energy Transition and Water Transformation Datuk Seri Abdul Rahman Mohamad told the Dewan Rakyat that the Energy Commission is studying the actual electricity needs of data centres, as reported by Bernama. "We know that data centres request more capacity, but their actual consumption is lower," he said.

He said the government agrees on the need for data centres linked to AI, but each application is weighed on the type of data handled, the benefits to the country and its people, the electricity and water it uses, and the investment value. Demand is especially high in the southern part of Peninsular Malaysia. Operators may also supply some of their own power through solar or battery storage, subject to Energy Commission licensing, and approvals must balance investor interests with national interests.

Why it matters for factories

Factories draw power from the same grid as data centres, so two things from this week are useful to a factory owner, tenant or buyer. First, the grid is being expanded, which over time means more headroom for new industrial loads and, through fast-track pathways, quicker connection of large supplies. Second, the review of data centre demand signals that the government wants capacity to go to genuine users rather than to speculative applications, which is reassuring for manufacturers planning power-hungry lines.

Power is often the deciding factor when choosing a factory. A plant with injection moulding, cold rooms, electroplating or heavy machinery can need hundreds of amperes or a dedicated substation, and a new maximum demand application or a transformer upgrade can take months. Buyers should check the existing supply and maximum demand at a site before committing, and build the lead time for any upgrade into their plans. You can get a rough sizing from our factory power calculator and see current high-power stock on our high-power factory page for Selangor.

Green power and self-generation

TNB noted that the Corporate Renewable Energy Supply Scheme (CRESS) and the Green Electricity Tariff give industries options to meet renewable energy needs. For exporters, this matters: buyers in Europe and multinational supply chains increasingly ask for low-carbon electricity, and a factory that can show green supply has an edge. Rooftop solar and battery storage are also moving from optional to mainstream, and the data centre review shows the government expects large users to generate some of their own power.

Practical next steps

• Confirm the incoming supply, maximum demand and whether a site has or can fit a substation before you buy or rent.
• Treat any power upgrade as a lead-time item, not a formality, and ask for the latest TNB position in writing.
• If your process is power-heavy, shortlist sites that already have the capacity rather than counting on a future upgrade.
• Consider rooftop solar for both cost and carbon, and check the roof and landlord consent early.
• If you need help matching a factory to a specific power requirement, speak to a registered agent who works the Klang and Selangor market, such as through our Klang industrial agent page.

The grid upgrade and the data centre review both point the same way: electricity is now central to where factories can go in the Klang Valley. Planning power early, and knowing the real capacity of a site, is the difference between a smooth move-in and a stalled one.

FAQ

How much is Budget 2027 putting into the national grid?

Budget 2027 highlights RM15 billion for the national grid. TNB says this is part of its RM43 billion investment over 2025 to 2027 to strengthen and modernise the grid.

Will the grid upgrade make it faster to get more power for my factory?

Over time it should add headroom for new industrial loads, but a new maximum demand application or transformer upgrade at a specific site can still take months. Check the existing supply at the site and get TNB's position in writing before you commit.

Why is the government reviewing data centre power demand?

The Deputy Minister told the Dewan Rakyat on 13 October 2026 that data centres request more capacity than they actually use, so the Energy Commission is studying their real needs. The aim is for capacity to go to genuine users.

Can a factory buy renewable electricity in Malaysia?

Yes. TNB points to the Corporate Renewable Energy Supply Scheme (CRESS) and the Green Electricity Tariff, and many factories also add rooftop solar. This helps exporters whose buyers ask for low-carbon supply.

FactoryHub is dedicated to helping every client find the right factory or warehouse. For industrial property in Klang, Port Klang and the wider Selangor market, contact Peter Tan (REN 12771) at 016-666 6872.