Surge in diesel prices may see increase in data centre fees, says academic

 Chen ZhiYuan of University of Nottingham Malaysia says the price increase could cause operators to skip routine tests.

Large data centres utilise ‘dozens of diesel-fuelled backup generator sets’, according to Chen ZhiYuan of University of Nottingham Malaysia. (File pic)

PETALING JAYA:

The increase in diesel prices sparked by the Iran war could force local data centre operators to hike their fees and possibly skip routine generator tests, an academic said.

Chen ZhiYuan of University of Nottingham Malaysia said large data centres utilise “dozens of diesel-fuelled backup generator sets.”

Chen ZhiYuan.

Data centres primarily run on grid power.

Diesel generators also serve as a backup power source for the cooling system, which is vital to prevent servers from overheating, she added.

Following the Middle East conflict, which led to the closure of the Strait of Hormuz, diesel prices have surged globally.

In Malaysia diesel retails at RM4.87 per litre.

“Diesel procurement has already become a material operational cost that operators must either absorb or pass on,” Chen, a professor who heads the School of Computer and Mathematical Sciences at the university, told FMT.

As of March 2026, there are approximately 54 existing operational data centres, with another 55 in the pipeline.

Chen also said that due to increasing fuel prices, data centre operators may opt to skip routine tests for backup generators, which are used in the event of a power failure.

She added that the increase in diesel prices would also force data centre operators to allocate more funds to purchase the fuel, leaving them with less capital to upgrade their hardware.

Chen said continued restrictions in the Strait of Hormuz may see the global energy market quickly evolve into a fight for supplies, driving up prices and benefiting buyers who can outbid others.

“Smaller operators without long-term supply contracts will be particularly exposed.”

Denny Ng.

Separately, Denny Ng of Sunway University believes the operational risk for data centres remains relatively low, noting that the national power supply has “consistently demonstrated resilience and stability, ensuring continuity of operations across the industry.”

However the increase in diesel prices could force operators to consider renewable energy as an alternative to diesel-powered generators, he said.

Ng said Malaysia is well-endowed with natural resources, positioning the country as an attractive and resilient hub for data centre development.

“With high rainfall and year-round solar irradiance across diverse regions, the country has strong potential to harvest rainwater for cooling and expand solar and hydro power generation,” said Ng, the university’s dean for the engineering and technology faculty. - FMT