Electricity Demand Growth Expected At 3.5% Driven By Rapid DC Addition
The Malaysian utilities sector is expected to remain a primary beneficiary of the country’s accelerating data centre rollout, securing a positive outlook from analysts. The sector is supported by resilient electricity demand growth and the promise of long-term recurring income streams, according to a recent report by Kenanga.
The house is maintaining its electricity demand growth forecast for the Financial Year 2026 at 3.5%, driven by an increase in commercial load and the rapid addition of data centre capacity across the country.
Tenaga Nasional remains the firm’s top pick positioned to gain from several key drivers: robust demand growth, an ongoing capital expenditure (capex) up-cycle for transmission and distribution (T&D) infrastructure, power purchase agreement (PPA) extensions, and new capacity build-outs. Independent Power Producers are also set to benefit, including Malakoff Corporation Berhad and YTL Power International Berhad.
With an aggressive target to deliver between 6GW and 8GW of new power capacity by 2030, the outcomes for the Energy Commission’s new power generation Request for Proposals (RFPs) are keenly awaited and expected by the end of 2025 or early 2026.
The rising electricity demand, particularly from data centres, is also projected to increase natural gas consumption. This trend supports the need for additional regasification terminals, which is expected to benefit gas distribution and infrastructure companies.
Among these, Petronas Gas Berhad and Gas Malaysia Berhad are highlighted as companies with strong prospects.
Analysts continue to favour the utilities sector overall, citing its earnings resilience—backed by regulated assets—stable cash flows, and attractive dividend yields, with GASMSIA offering a compelling yield of up to approximately 6%. Kenanga maintains an OVERWEIGHT rating on the sector.
