Kuala lumpur: The utilities sector is expected to see significant growth benefits as Malaysia continues to expand its data centre infrastructure, driven by steady electricity demand and sustainable income streams.

According to BERNAMA News Agency, Kenanga Investment Bank Bhd (Kenanga IB) has retained its forecast for a 3.5 percent demand growth in the financial year 2026 (FY2026). This growth is attributed to increasing commercial load and the rapid expansion of data centre capacities. Notably, data centre load utilisation surged to 710 megawatts (MW) in September 2025, up from 503 MW in June 2025. By September 2025, a total of 29 data centre projects with a combined capacity of 3,800 MW had been completed, including 11 projects (1,900 MW) launched within the first nine months of FY2025.

Year-to-date developments include the signing of eight new electricity supply agreements (ESAs), which added 1,100 MW to the grid, bringing the total to 49 ESAs with a cumulative capacity of 7,100 MW. Kenanga IB highlighted that in order to deliver six gigawatts (GW) to eight GW of new capacity by 2030, the outcomes of the Energy Commission’s new power generation request for proposals are anticipated by the end of 2025 or early 2026.

Kenanga IB further noted that construction is expected to begin by the end of 2026, alongside ongoing extensions of existing and expiring power purchase agreements. With no new coal-fired plants planned, gas-fired generation remains the key capacity to support this demand growth.

The investment bank maintained an overweight rating on the utilities sector, with Tenaga Nasional Bhd identified as the primary long-term beneficiary of the data centre expansion. This is due to its exposure to demand growth, transmission and distribution capital expenditure cycles, and new capacity developments. Independent power producers like Malakoff Corporation Bhd and YTL Power International Bhd are poised to benefit from both brownfield extensions and greenfield opportunities.

Additionally, rising gas demand forecasts positive earnings prospects for companies such as Petronas Gas Bhd and Gas Malaysia Bhd, according to Kenanga IB.