Malaysia has become an increasingly popular destination for US companies to establish data centers, primarily due to the country’s cost advantages, particularly its low electricity tariffs. This factor plays a crucial role in the decision-making process, as energy consumption is one of the largest operational expenses for data centers.
Electricity Cost Comparison: Malaysia vs. USA
The cost of electricity varies significantly between Malaysia and the United States, making Malaysia an attractive option for energy-intensive facilities like data centers.
1. Average Electricity Costs for Businesses
Malaysia: The average electricity tariff for businesses in Malaysia is around $0.07 to $0.10 per kilowatt-hour (kWh).
USA: In the United States, electricity costs for commercial and industrial users range from $0.10 to $0.20 per kWh, depending on the state. In states like California or New York, rates can exceed $0.20 per kWh due to high demand and energy policies.
2. Data Center-Specific Consumption
Data centers consume massive amounts of energy, with some facilities using hundreds of megawatts per year. A difference of even a few cents per kWh can translate into millions of dollars in annual savings. For example:
A typical large-scale data center consuming 100 MW per year:
In Malaysia: $7 million to $10 million annually.
In the USA: $10 million to $20 million annually.
This stark contrast highlights why Malaysia’s electricity pricing is a game-changer for companies aiming to cut operational expenses.
Why Electricity Costs Are Lower in Malaysia
Several factors contribute to Malaysia’s lower electricity costs:
Abundant Energy Resources: Malaysia relies on affordable energy sources, such as natural gas and coal, for electricity generation.
Government Subsidies: The Malaysian government provides subsidies to ensure stable and competitive electricity prices for industries.
Regulated Energy Market: Malaysia’s energy sector is regulated, which helps keep prices consistent across the country.
Beyond Electricity Costs: Other Advantages
While electricity prices are a significant factor, US companies also consider other benefits of locating data centers in Malaysia:
Government incentives such as tax breaks and rebates.
Strategic location in Asia for accessing growing digital markets.
Skilled workforce and reliable technology infrastructure.
Conclusion
The difference in electricity costs between Malaysia and the USA is a compelling reason for US companies to establish their data centers in Malaysia. A data center in Malaysia not only offers substantial savings on energy expenses but also benefits from the country’s strategic location, skilled talent pool, and government support.
As the global demand for data storage and processing continues to rise, Malaysia’s competitive edge in electricity costs makes it a standout choice for international tech companies. By choosing Malaysia, these companies can achieve cost efficiency without compromising on infrastructure or connectivity.