By: Joko Sutopo, Head of Services Southeast Asia at Sulzer
As coal declines and data centre demand accelerates, Malaysia’s gas-fired assets are being asked to work harder, making reliability increasingly critical.
Malaysia’s gas-fired power fleet is being asked to deliver two things simultaneously: replace coal as the grid’s stabilising force, and power what is projected to be the fastest-growing data centre market in Southeast Asia.
Gas-fired power generation in Peninsular Malaysia rose 17.7% year on year in the first quarter of 2026, lifting gas to 39.4% of the power generation mix,, as coal-fired output fell to 54.4% from 58% according to Malaysia’s grid operator, TNB. The shift accelerated in April, when gas-fired output climbed 50.5% to a record 5.54TWh, based on Grid System Operator data analysed by Reuters.
This reflects by the policy direction of the National Energy Transition Roadmap, which designates natural gas as the transition fuel for baseload power while the country commits to phasing coal out entirely by 2044.
At the same time, Malaysia is experiencing a data-centre boom that is creating unprecedented demand. Data centres are projected to account for 31% of Peninsular Malaysia’s electricity use by 2035, up from roughly 7% in 2026. Meanwhile, TNB’s own investor reporting shows data centre consumption rising 2.3 times year-on-year in the first quarter of 2026.
Together, these pressures mean Malaysia’s gas-fired generation fleet must carry considerably more than it was designed to. Government planning already leans heavily on this fleet, and has identified several existing power plants for phased operating extensions between 2025 and 2029.⁶ With new combined-cycle gas capacity only ready within four to five years, the existing fleet must shoulder the near-term load. TNB’s CEO has indicated that the utility plans to add 6–8 GW of gas-fired capacity by 2030 through new builds and life extensions of existing plants⁵ but until that capacity arrives, today’s plants will continue carrying much of the pressure.
The growing service and support gap
When coal carried a larger share of baseload generation, a gas plant failure was often a manageable and localised disruption. Today, with gas accounting for a significant portion of Malaysia’s power mix, playing an increasingly important role in balancing renewable energy generation, and supporting growing demand from industries and data centres, an unplanned outage can have much wider consequences for grid stability.
Due to global disruptions and heightened demand, lead times for critical rotating equipment components have been extended significantly, in some cases to a year or more. Meanwhile, OEM service capacity is focused on new equipment production, leaving the in-service fleet with less support at a time when operators need faster turnaround. While operators are aware of asset ageing, conservative responses can result in slower and more costly outcomes.
Getting more from the assets already in place
While new capacity gradually comes online, the most immediate lever is improving the performance of existing infrastructure.
Advanced diagnostics, instead of periodic maintenance, allows teams to detect mechanical decline before a fault becomes a forced outage. Precision interventions before failures occur can restore performance, extend asset life and reduce outage risk.
There are already examples of this approach working across the region. In Malaysia, an in-depth inspection on a gas turbine uncovered damage that risked prolonged downtime, with OEM replacement expected to take more than a year. By combining advanced diagnostics with targeted repairs, engineers restored the unit within three months, avoiding significant production losses.
Catching deterioration early, and responding quickly, can ultimately make the difference between planned maintenance and an emergency outage.
Creeping degradation can also cause equipment to lose its original output. Efficiency retrofits can recover the capacity it was meant to produce. At a 400 MW plant in Indonesia, an equipment upgrade completed in under three months improved performance and lowered lifecycle costs compared with full system replacement. Even single-digit efficiency gains of this kind can compound across a fleet. Within Malaysia’s gas-fired generation base, recovering modest availability improvements can translate into meaningful megawatt-hours that can relieve system pressure during peak demand periods.
For assets approaching key lifecycle milestones, a timely in-depth equipment assessment is often the most effective way to determine the right course of action to protect reliability, optimise investment and identify opportunities for life extension. Rather than defaulting to replacement, operators can make informed decisions based on the asset’s actual condition and performance potential. In once recent major steam turbine restoration in Vietnam, the operator achieved cost savings of 40% against full replacement, and the unit was reset to a new lifetime of up to 20 years, returning to peak performance in a fraction of the new-build timeline.7
Speed also matters much more today than, say, five years ago. When a gas plant is running at elevated levels to fill gaps between intermittent solar and meet data centre demand, the tolerance for extended outages has effectively reached zero.
Reliability is becoming an investment issue
TNB is entering what it describes as a major infrastructure investment cycle, with base regulated capital expenditure rising from RM20.6 billion in the previous regulatory period to RM26.6 billion, plus a further RM16.3 billion in pre-approved contingent capex for the 2025–2027 period alone.10 The focus has rightly been on expanding generation capacity and modernising transmission but that investment only holds its value if existing generating assets can continue performing reliably at the higher outputs now being demanded of it.
Furthermore, cloud providers and hyperscale operators consider infrastructure reliability when deciding where to locate their data centres, while investors make choices by scrutinising uptime records. The government’s Data Centre Task Force now approves new data projects only where they are consistent with local grid capacity planning so as not to compromise supply.5 Regionally, regulators are also driving emissions and efficiency improvements, increasing demand for upgrades and retrofit solutions that help operators improve performance, reduce emissions and extend asset life.
Malaysia’s data centre ambitions hinge on uptime, and so does the transition away from coal. Both require reliability and the enhanced performance of existing power plants. New capacity may arrive eventually, but until it does, the assets carrying the load will need to perform reliably under increasingly demanding conditions.
