A10.02 — Electricity Costs Behind Malaysia’s Data Centres – Establishing Unit Costs for the Connection Charge

ByMalaysia Data Centre Observatory

Key Takeaways

  • A10.02 — Electricity Costs Behind Malaysia’s Data Centres – Establishing Unit Costs for the Connection Charge of TNB establishes a common set of indicative infrastructure unit costs for applying the A10 methodology to a large data-centre connection.
  • The costing framework covers the principal infrastructure building blocks considered in the reference case, including 275-kV overhead transmission lines, underground cables, switching stations, 500/275-kV PMUs, protection upgrades and land.
  • Unit costs are expressed using asset-specific cost units — such as RM per route-km, circuit-km, station, PMU, package or square metre — rather than relying on a single generic RM/MW assumption.
  • The selected rates are based primarily on publicly available Malaysian project evidence, supported where necessary by international benchmarks, cost normalisation and engineering judgement. They are analytical estimates, not TNB quotations or confidential project costs.
  • The distinction between project cost and RAB value is important. A10.02 uses current construction-cost estimates to establish the illustrative Project Cost required for the Connection Charge analysis, rather than attempting to derive a generic unit rate from TNB’s regulated asset base.
  • The rates are deliberately subject to ranges and limitations, since actual route selection, system studies, equipment requirements, land, terrain, environmental mitigation, procurement prices and connection topology are project-specific.
  • The resulting unit-rate schedule provides the quantitative input for A10.03, where the reference data centre’s infrastructure quantities will be multiplied by the applicable rates to establish Project Cost and examine the resulting Connection Charge or RCC outcome under TNB’s published 1st Principle methodology.

Parent article: A10 — Who Pays for the Electricity Behind Malaysia’s Data Centres?

Why This Article Needs a Common Cost Basis

The preceding article established a common reference case for examining the electricity costs associated with supplying a large data centre. The case is based on a hypothetical 300 MW Maximum Demand data centre in Iskandar Puteri, Johor, supplied at 275 kV. It also established an illustrative generation centre, defined the electricity-system boundary, and distinguished between existing, new and reinforced infrastructure, as well as dedicated and shared infrastructure. Importantly, it also established that different assets should be costed using appropriate units rather than applying a single generic RM/MW measure to the entire electricity system.

The next article will use that common case to answer a more specific question:

How much would the illustrative connection infrastructure cost, and what portion would be attributable to the 300 MW data centre?

Before that calculation can be performed, however, a reasonable cost must first be established for each physical asset included within the connection scenario. A calculation such as 40 km multiplied by RM X million per kilometre is only meaningful if the RM X million per kilometre is reasonably representative of the type, voltage, configuration and construction conditions of the transmission line being modelled.

This article therefore establishes a common cost-rate library for the illustrative calculation. The rates will be used consistently in the following article and, where appropriate, may also provide a common reference for other calculations in this series.

The objective is not to predict the actual cost of a particular TNB project. Actual project costs depend on the selected route, system requirements, site conditions, procurement arrangements, design specifications and other project-specific factors. Instead, the objective is to establish rates that are transparent, reproducible, internally consistent and reasonably realistic, while making the assumptions and sources sufficiently clear that the rates can be reviewed and updated when better information becomes available.

What Exactly Is Being Costed?

The purpose of the costing exercise is to estimate the construction cost of the electricity-system infrastructure required by the illustrative connection arrangement. For consistency, the construction cost of each relevant asset is intended to cover the complete process of bringing that asset into service:

design + procurement + construction + installation + testing + commissioning

This includes, where applicable:

  • engineering and design;
  • major electrical equipment;
  • materials;
  • civil and structural works;
  • installation;
  • construction;
  • testing;
  • commissioning;
  • contractor or EPC costs; and
  • reasonable project-related construction overheads where these are supported by the underlying cost benchmark.

Some costs will be treated separately rather than incorporated into the construction unit rate. These include land acquisition, wayleave or right-of-way costs, statutory or third-party requirements, protection-relay modification or reconfiguration, and other special works that are sufficiently site-specific or separately identifiable to warrant their own costing basis.

Conversely, the calculation excludes facilities that are on the customer side of the defined network interface. This includes the data centre’s internal electrical infrastructure, UPS systems, standby generators, internal medium- and low-voltage systems, and customer-side transformers or other equipment beyond the boundary established for the connection case. Operating expenditure is also excluded. Financing costs are excluded unless they are explicitly included within a particular source cost benchmark.

This boundary is important because the Project Cost used in TNB’s Connection Charge methodology depends on the infrastructure attributable to the consumer. For a fully dedicated supply, TNB states that the full Project Cost is used. Where infrastructure is non-dedicated or forms part of the transmission network, the Project Cost attributable to the consumer is apportioned according to the consumer’s requested Maximum Demand and the carrying capacity of the transmission line.

The rates established in this article must therefore describe not only a plausible construction cost, but also a clearly defined physical asset and, where relevant, its capacity.

A Short Note on RAB: Why We Are Not Using One “RAB Unit Rate”

The idea of establishing a single unit rate for existing electricity infrastructure may initially appear straightforward. For example, one might try to determine the current value of a 275 kV transmission line by multiplying its length by a current construction cost per kilometre. That would not, however, represent how the regulated asset base (RAB) is established under Malaysia’s Incentive-Based Regulation framework.

The RAB represents the regulated investment in assets used to provide the regulated service. The regulatory framework provides for the existing asset base to be carried forward and for subsequent changes to be made through the addition of eligible capital expenditure, depreciation, disposals and applicable regulatory adjustments. The framework also provides that customer-funded portions of investment are excluded from the RAB.

An important principle is that assets included in the RAB are valued at their historical cost of purchase or construction, rather than being routinely revalued to current replacement cost. The Commission may also exclude costs that it considers inefficient, imprudent or unnecessary for the provision of regulated services.

This creates an important distinction between an existing asset and a newly constructed asset. The historical regulated value of an existing transmission line may reflect the cost at which that asset was originally constructed, subject to its regulatory treatment and subsequent depreciation and other adjustments. A newly constructed transmission line, by contrast, has a current construction cost that can potentially enter the RAB as eligible capital expenditure, subject to the regulatory framework.

Consequently, there is no single defensible RM/km figure that simultaneously represents the historical cost of an existing transmission line, the current cost of constructing a new transmission line, and the regulatory value of that line in the RAB.

For the connection-charge illustration, this article therefore takes a practical approach. It will establish reasonably realistic current construction-cost rates rather than attempt to reconstruct the historical RAB of existing network assets. These rates are intended as analytical cost assumptions for the illustrative case, not as TNB’s actual historical asset values or confidential regulatory cost data.

Once established, the rates can also be normalised to another reference year where required. This allows the same cost basis to be used consistently across the analysis while recognising that construction costs change over time through inflation and changes in equipment, labour and construction costs.

The Connection Charge Requires Project Cost, Not RAB Value

The distinction between RAB value and Project Cost is important because the two serve different purposes.

The RAB is a regulatory accounting concept used in the IBR framework to determine the regulated return and revenue requirement of the electricity network. The Project Cost used in the Connection Charge calculation, by contrast, relates to the capital investment required to provide the particular electricity supply and the portion attributable to the customer.

Under TNB’s 1st Principle method, the Project Cost is compared with the Present Value of Future Cash Flow expected from the customer’s electricity consumption over the 15-year assessment period. The future cash flow is discounted using the approved Weighted Average Cost of Capital (WACC). Where the present value of the expected return is less than the relevant Project Cost, a Connection Charge is imposed to make up the shortfall.

For a fully dedicated supply, TNB states that the full Project Cost is used in the calculation. Where the infrastructure is non-dedicated or forms part of the transmission network, however, the Project Cost is apportioned according to the customer’s requested Maximum Demand and the carrying capacity of the transmission line.

This distinction directly determines the methodology used in this article. It is not sufficient to establish the construction cost of an asset. The analysis must also establish the capacity associated with that asset and the capacity basis used to allocate its cost.

This is particularly important for the illustrative 300 MW data centre because the reference network may include a four-circuit 275-kV overhead line, a two-circuit 275-kV underground cable and 500/275-kV PMUs. The unit-cost schedule therefore needs to identify not only RM per kilometre or RM per facility, but also the corresponding electrical capacity against which the relevant cost may be apportioned.

The resulting framework allows the next article to move from physical infrastructure and unit costs to an illustrative Project Cost and, ultimately, the Connection Charge.

Method Used to Establish the Rates

The purpose of this article is not to identify a single published price for each type of electricity infrastructure. Such prices vary substantially with voltage, configuration, capacity, terrain, route conditions, land requirements, equipment specification, construction environment and project date. Instead, the objective is to establish a reasonably realistic and transparent unit-cost range from which a representative rate can be selected for the illustrative case.

For each asset, evidence will be considered according to a hierarchy.

Tier 1 — Malaysian actual project costs

The strongest evidence will normally be Malaysian project information that identifies both the infrastructure scope and its cost. Sources may include TNB disclosures, Bursa Malaysia announcements, contractor and EPC disclosures, annual reports, TNB tender information, and consultant or project references.

Where project quantities such as route length, transformer capacity or number of circuits are available, the total project cost can be converted into an appropriate asset-specific unit rate.

Tier 2 — Malaysian industry cost information

Where direct project evidence is insufficient, the analysis will consider Malaysian engineering cost studies, construction-cost information, professional or industry publications and other published infrastructure benchmarks. These sources can help establish the expected relationship between project scope and cost where individual project disclosures are incomplete.

Tier 3 — International benchmarks

International evidence, including CIGRE studies, transmission-utility information and recognised engineering cost studies, will be used where Malaysian evidence is limited. Such information will not be transferred directly into the Malaysian analysis. It will first be considered against differences in voltage, configuration, currency, location, construction conditions, labour and material costs, and project date.

Tier 4 — Sanity checks

The resulting rates will then be tested against alternative evidence, published Malaysian projects, historical projects adjusted for inflation where appropriate, and basic engineering expectations.

The final rate will therefore not simply be the lowest or highest observed value. MDCO will select a central or otherwise representative value, explain the basis for its selection, and state the uncertainty surrounding it. Where the evidence does not support a sufficiently precise figure, a range will be retained rather than creating false precision.

This approach is intended to make the cost model transparent, reproducible and capable of being updated as better Malaysian project evidence becomes available.

275-kV Overhead Transmission Line

Asset definition

The reference case assumes four independent 275-kV circuits, configured as two double-circuit overhead transmission lines. This distinction is important. A conventional double-circuit tower carries two electrical circuits; therefore, four circuits represent two such double-circuit line assets, rather than one “four-circuit” double-circuit line.

For the conductor configuration, the illustrative case adopts 2 × ACSR Zebra bundled conductors per phase. TNB technical material identifies approximately 683 MVA per circuit for this 275-kV configuration. The resulting capacity is therefore approximately 1,366 MVA for one double-circuit line and 2,732 MVA for four circuits. These are analytical thermal-carrying-capacity assumptions for the cost-apportionment model, not guaranteed operating ratings for an actual TNB project.

Establishing the unit rate

Recent Malaysian project evidence provides the most useful basis for the rate. Cheeding reports an EPCC contract of RM61 million for the 275-kV double-circuit Ayer Tawar–Seri Iskandar West line and RM55.5 million for the 275-kV Seri Iskandar West–Kampung Gajah line. Both are direct Malaysian TNB transmission projects and therefore provide stronger evidence for this analysis than generic international benchmarks.

Additional evidence provides useful cross-checks. The 275-kV Bakun–Samalaju transmission package was reported at RM270 million for 139 km, equivalent to approximately RM1.94 million per route-km at the time. The Pengerang project comprised a 45-km 275-kV double-circuit line, but its RM257 million contract also included a 275/132-kV substation and therefore cannot be used directly as a line-only rate.

After considering these Malaysian benchmarks, historical cost escalation and international sanity checks, MDCO adopts RM2.5 million per route-km for one 275-kV double-circuit overhead line as the central illustrative rate, with an indicative range of RM2.0–3.0 million per route-km. This corresponds to approximately RM1.25 million per circuit-km. International CIGRE data, which indicates substantially higher costs in some overseas environments, is treated as a reasonableness check rather than transferred directly into the Malaysian model.

For the four-circuit reference configuration, two double-circuit lines would therefore represent RM5.0 million per common route-km, before any separately identified land, special crossing, exceptional terrain or other project-specific costs. The corresponding 2,732 MVA total carrying capacity will be used as the capacity denominator for the illustrative TNB-style apportionment in the next article.

275-kV Underground Cable

The reference case assumes a 275-kV underground cable route comprising two independent circuits. For the purpose of this analysis, each circuit is assumed to use a high-capacity single-core XLPE cable system suitable for 275-kV transmission. A 2,500 mm² conductor provides a useful reference configuration: documented 275-kV installations have achieved approximately 660 MVA per circuit, although the actual rating depends on conductor material, installation arrangement, thermal resistivity, spacing, bonding and operating conditions.

Accordingly, this article adopts 660 MVA per circuit, giving an illustrative 1,320 MVA total carrying capacity for the two-circuit route. This is a capacity assumption for subsequent cost apportionment and should not be interpreted as a prescribed TNB cable rating.

Establishing the unit rate

Underground cable costs cannot reliably be derived by applying a simple multiplier to the overhead-line rate. The cost is influenced by cable conductor and insulation specification, trench or duct construction, thermal backfill, joint bays, terminations, road crossings, horizontal directional drilling or tunnelling, land constraints and the density of existing utilities.

Recent Malaysian evidence is particularly relevant. In 2026, Jati Tinggi received a RM79.86 million TNB contract for 275-kV double-circuit underground cables supplying a data centre in Pasir Gudang. Another Johor data-centre contract awarded in the same year was RM10.56 million for two 275-kV underground cable circuits, including secondary-equipment modification works. Neither disclosure gives sufficient route-length information to derive a direct RM/km rate, but both provide useful checks on the scale of current Malaysian projects.

International evidence provides further triangulation. ElectraNet has reported approximately A$4.95 million/km for undergrounding each 275-kV circuit, excluding separate transition-station costs, while CIGRE gives an indicative range of US$10–15 million/km for typical 275-kV underground transmission construction.

Taking the Malaysian project evidence, international benchmarks and differences in construction environment into account, MDCO adopts RM20 million per circuit-km as the central illustrative rate, with an indicative range of RM15–30 million per circuit-km.

For the two-circuit reference route, this is equivalent to RM40 million per route-km, with an indicative range of RM30–60 million per route-km. The selected rate includes the cable installation system and associated civil works at a representative level, but exceptional tunnelling, major HDD works, unusual crossings, transition stations and other separately identifiable special works should be added where applicable rather than hidden within the general rate.

The resulting reference capacity is 1,320 MVA for two circuits, providing the capacity denominator for the illustrative TNB-style cost apportionment in A10.03.

275-kV Switching Station

For this analysis, a 275-kV switching station is a transmission switching facility that connects and controls 275-kV circuits without including power transformation. The reference asset therefore comprises the 275-kV GIS or AIS switchgear, busbars, circuit breakers, isolators, current and voltage transformers, protection and control systems, SCADA, station buildings, auxiliary systems, civil and structural works, testing and commissioning.

Power transformers are excluded. They are treated separately as part of the 500/275-kV PMU in the following section. This prevents transformer costs from being counted twice when the illustrative transmission path is assembled.

The strongest Malaysian benchmark identified is the RM137.8 million TNB contract awarded in 2025 for the new 275-kV PMU Kenyir GIS switching station. The disclosed scope comprises the complete GIS switching station with double-busbar configuration, relevant primary and secondary equipment, and associated civil works. This closely matches the asset definition used here.

A separate 2025 market disclosure of a RM162.59 million high-voltage switching-station project for a hyperscale data centre in southern Malaysia provides a useful upper-range check, although its scope includes a containerised SSU and is therefore not directly comparable.

Taking these Malaysian benchmarks into account, MDCO adopts RM140 million per 275-kV switching station as the central illustrative rate, with an indicative range of RM120–160 million per station.

A reliable RM/bay rate cannot be established from the public evidence without knowing the number and configuration of GIS bays. The model will therefore use a station-level rate, with the number of incoming and outgoing circuits specified separately in A10.03. This avoids creating false precision while retaining a transparent basis for the connection-cost calculation.

500/275-kV PMU

The 500/275-kV PMU is potentially one of the largest individual components in the illustrative transmission path. For consistency, this article adopts a standard reference configuration of two 1,050 MVA transformer banks, giving a total installed transformation capacity of 2,100 MVA.

The PMU is treated as a complete transmission facility comprising the 500-kV switchyard, 275-kV switchyard, two 500/275-kV autotransformers, protection and control, SCADA and telecontrol, auxiliary systems, buildings, civil works, testing and commissioning. Transformer costs are therefore included here, while the separate 275-kV switching-station rate in Section 8 excludes transformers to avoid double counting.

The configuration should not, however, be interpreted as an actual physical route in which the data centre’s electricity necessarily travels through one transformer from 500 kV to 275 kV and another transformer in the opposite direction. The Illustrative Generation Centre in A10.01 is a geographical reference used to construct the analytical network, not an actual dispatch point. The PMUs therefore represent transmission-path infrastructure within the model rather than a claim about the physical dispatch route of the 300 MW data centre.

Establishing the unit rate

Malaysian project evidence provides useful benchmarks. In 2017, TNB awarded RM79.5 million for the supply, erection and commissioning of 2 × 1,050 MVA autotransformers, 500-kV and 275-kV switchgear, ancillary equipment and associated civil works at PMU Olak Lempit. The earlier Yong Peng East 500/275-kV PMU, also configured at 2 × 1,050 MVA, was reported at RM134.4 million.

More recent evidence indicates the scale of current costs. In 2025, TNB awarded RM427.5 million for the new 500/275-kV Gurun East GIS PMU, comprising 3 × 1,050 MVA transformers together with primary and secondary systems and associated civil works. This is a particularly useful current benchmark, although its GIS configuration and new-build scope make it broader than a simple transformer replacement or extension.

Taking these project benchmarks together, while allowing for differences in GIS/AIS configuration, scope, site conditions and project date, MDCO adopts RM180 million per 2 × 1,050 MVA 500/275-kV PMU as the central illustrative construction cost. An indicative range of RM150–220 million per PMU is retained to reflect the uncertainty.

The resulting reference transformation capacity is 2,100 MVA per PMU. If the illustrative transmission path requires two such PMUs, the combined reference cost is therefore RM360 million, with a combined transformation capacity of 4,200 MVA.

These values are analytical inputs for the subsequent connection-cost calculation, not estimates of any specific TNB project or confidential TNB pricing.

Protection Relay Upgrade / Reconfiguration

Protection work is treated separately from the major transmission assets because its cost does not scale meaningfully with route length or transformer MVA. For this analysis, the preferred unit is therefore RM per affected 275-kV bay or circuit protection package.

The package may include relay replacement or upgrade, protection coordination and settings, control and protection wiring modifications, interface with SCADA and station control systems, functional and stability testing, end-to-end testing where required, commissioning and return to service.

A distinction is made between a new protection system and modification or reconfiguration of an existing system. A new system may require complete protection panels, communications equipment and associated wiring, whereas an upgrade may involve replacing selected relays and modifying existing interfaces. The latter is the more appropriate reference for existing network assets in the illustrative connection model.

Published TNB transmission testing schedules provide a useful bottom-up check. For 275-kV equipment, the historical schedule includes testing rates for M1/M2 protection relays, individual protection functions, circuit-breakers, stability tests and end-to-end protection tests. These are testing rates only and therefore do not represent the complete cost of a protection modification package.

Recent Malaysian evidence also shows that 275-kV substation upgrade contracts can involve substantial engineering and construction scope; for example, a 2026 275-kV substation upgrade in Selangor was awarded at RM26.2 million. This is far broader than protection work alone and is used only as a scale check.

Taking these factors into account, MDCO adopts RM0.5 million per affected 275-kV bay/circuit protection package as the central illustrative rate, with an indicative range of RM0.25–0.75 million.

This rate should be applied only to protection-related modifications. Where a completely new protection system is required, the actual project scope should be separately assessed rather than assumed to fall within this allowance.

Land Cost

Land is different from the other cost components in this analysis because the appropriate cost depends not only on location and land value, but also on how the land is made available for the electricity infrastructure.

For a 275-kV switching station or 500/275-kV PMU, the appropriate unit is RM per square metre of acquired site land. Recent JPPH/NAPIC transaction evidence provides a useful Malaysian benchmark. Large industrial-land transactions in Johor reported in 2024 included approximately RM753/m² at Sedenak Tech Park, RM807/m² at Senai and approximately RM1,400/m² at Taman Perindustrian Nusa, Pulai.

On this basis, MDCO adopts RM1,000/m² as the central illustrative site-land rate, with an indicative range of RM750–1,400/m². This is a benchmark for the value of suitable industrial/development land, not a prescribed TNB land price.

The economic treatment of land requires a broader perspective than simply asking whether TNB purchases the land. Where a PMU is required, TNB’s current Connection Charges Book generally requires the consumer/developer to provide the land and bear the associated land costs, with the land subsequently transferred to TNB at nominal consideration. Thus, the nominal transfer price does not mean that the underlying economic value of the land is zero.

Transmission corridors require a similar distinction. A wayleave does not necessarily involve TNB purchasing the land. Under the Electricity Supply Act framework, compensation may instead be payable to the landowner for the right to use the wayleave, with the Land Administrator determining the compensation. The underlying land therefore continues to have an economic value even where ownership does not change.

For the purposes of this series, MDCO therefore adopts RM1,000/m² as a common illustrative land-value benchmark, including for land that is provided, transferred, acquired or otherwise made available for the electricity infrastructure being analysed. This does not imply that RM1,000/m² is the actual transaction price or compensation payable in a particular project. Rather, it provides a consistent measure of the economic land resource committed to the electricity infrastructure.

Accordingly, A10.03 will identify the land area associated with each relevant PMU or switching-station site and apply the RM1,000/m² benchmark. For transmission corridors, the same benchmark may be applied to the land area economically affected or committed to the transmission route, subject to the specific treatment adopted for the corridor in the reference case.

This approach recognises that the economic cost of land does not disappear merely because it is provided by a developer, transferred to TNB at nominal consideration, already owned by TNB, or compensated through a wayleave arrangement. The immediate payer and the ultimate economic bearer may be different parties.

Land is therefore included in the A10 costing framework as a real economic resource cost, rather than as a generic percentage added to transmission construction costs.

Inflation and Time Normalisation

The project evidence used in this article comes from different years, and the effect of inflation and changes in construction, equipment and material costs should therefore be recognised. A project awarded several years ago cannot, strictly speaking, be compared with a current project simply by comparing its original nominal contract value.

In principle, historical project costs could be normalised to a common reference year using appropriate Malaysian construction, building-material or other relevant cost indices. DOSM publishes cost and material indices covering areas relevant to infrastructure construction, including civil engineering, building, mechanical and electrical works. These provide a possible basis for such adjustments.

For the purposes of this article, however, no formal inflation or time adjustment is applied to the selected rates. The analysis is being undertaken within a relatively short period around the current 2026 reference point, and the selected rates are intended as current illustrative rates for use within this series, rather than as a historical cost database.

This approach also avoids introducing an additional layer of estimation where the available project evidence may contain differences in scope, technology, procurement conditions and asset configuration that cannot be reliably separated from general price inflation.

The selected rates should therefore be understood as indicative present-day analytical rates, informed by both recent and historical evidence but not mechanically indexed from their original contract dates.

Where these rates are subsequently reused for analysis in a materially different year, they may be reassessed or independently normalised using the then-appropriate cost indices and market evidence. The original project year and source cost should therefore remain part of the underlying evidence record.

The objective here is simplicity, transparency and practical consistency: establish a common rate basis for the present A10 analysis without implying a level of inflation-adjustment precision that the underlying evidence does not support.

Unit-Rate Schedule

The analysis above produces a common set of indicative unit rates for the reference case. The rates are not TNB quotations or tariff rates; they are MDCO analytical estimates selected from the available Malaysian project evidence, international benchmarks, inflation normalisation and engineering judgement. They provide a transparent and updateable basis for the next article in this series.

AssetReference configurationCost unitSelected rateCapacity basis
275-kV overhead transmission lineDouble-circuit OHL; four circuits represented by two linesRM/route-kmRM2.5m per double-circuit line683 MVA/circuit; 1,366 MVA/double-circuit line
275-kV underground cableTwo independent circuitsRM/circuit-kmRM20m660 MVA/circuit; 1,320 MVA total
275-kV switching stationDefined station scope, excluding transformersRM/stationRM140m—
500/275-kV PMU2 × 1,050 MVA transformersRM/PMURM180m2,100 MVA
Protection upgradeExisting 275-kV bay/circuit modificationRM/packageRM0.5m—
PMU landSite acquisitionRM/m²RM1,000—
Switching-station landSite acquisitionRM/m²RM1,000—
Transmission ROWActual acquisition/wayleaveRM/m²RM1,000—

For the overhead line, two double-circuit lines on a common analytical route would therefore be represented as RM5.0 million per route-km. For underground cable, two circuits would be RM40 million per route-km.

These rates form the input table for A10.03, where the physical quantities of the reference supply scheme will be combined with the applicable rates to establish an illustrative Project Cost and subsequently examine the Connection Charge under TNB’s 1st Principle framework.

From Unit Rates to the Connection Charge

The unit rates established in this article are not the final answer. They are the cost building blocks that will be applied to the physical supply arrangement defined for the reference data centre in A10.03.

For each asset, the basic calculation is:

Quantity × Unit Cost = Project Cost

The relevant assets will then be classified according to whether they are dedicated to the data centre or form part of the wider transmission network. Where applicable, the project cost will be apportioned to establish the data-centre-attributable Project Cost, consistent with TNB’s published approach for non-dedicated transmission assets.

A10.03 will then apply TNB’s 1st Principle methodology: projected 15-year customer revenue, less running cost, produces the relevant annuity; the resulting future cash flow is discounted at the applicable WACC and compared with the attributable Project Cost. Where the present value is below Project Cost, a Connection Charge arises; where it exceeds Project Cost, the published methodology provides for no Connection Charge and a Refundable Connection Charge (RCC) of 25% of Project Cost, subject to the applicable MD achievement conditions.

This provides the clear hand-off from cost estimation in A10.02 to Connection Charge analysis in A10.03.

Limitations of the Unit Rates

The rates established in this article should not be interpreted as estimates of the actual cost of connecting any particular data centre. A real connection is determined by site-specific engineering, system studies, network conditions and commercial arrangements.

In particular, this analysis does not establish the actual TNB route selection, system-study results, transformer loading, fault levels, protection requirements or final connection topology. It does not determine actual land acquisition costs, terrain conditions, environmental mitigation, road and river crossings, underground construction conditions or other project-specific civil requirements. Nor does it capture the effect of project acceleration, unusual procurement requirements or the actual prices obtained by TNB through its procurement processes.

The reference configurations are therefore analytical representations rather than assumed TNB designs. Actual transmission capacity, equipment ratings and network reinforcement requirements may also differ from the simplified capacity bases used here.

Accordingly:

A10.02 is an analytical costing model, not a quotation for a real data-centre connection.

Its purpose is to make the assumptions and cost-building blocks visible, reproducible and capable of being updated as better Malaysian evidence becomes available. This is consistent with MDCO’s role as an independent research and knowledge-sharing initiative rather than an advocate for any particular outcome.

The Observatory Perspective

The important question is not simply how much a transmission line costs. It is how a particular data centre’s connection uses and contributes to the electricity infrastructure, and how the associated cost is subsequently recovered.

That distinction matters because a large data centre may require a combination of dedicated facilities, shared transmission assets, network reinforcement, land and other infrastructure. The resulting cost cannot be understood reliably from a single unexplained RM-per-MW figure.

A transparent unit-cost framework instead allows the reader to see the building blocks, the configuration assumed, the capacity basis and the evidence supporting each rate. It also makes clear which elements remain uncertain and require project-specific information.

A10.02 therefore establishes the cost building blocks. A10.03 will apply those building blocks to the 300 MW reference data centre and examine how the resulting attributable Project Cost feeds into the Connection Charge calculation.

The same framework can then be reused, with appropriate adjustments, in subsequent A10 articles. The objective is not to produce a single universal number, but to provide a transparent way of asking who pays for the electricity infrastructure behind Malaysia’s data centres — and why.

Selected References

Malaysian Electricity Regulation and Connection Framework

Malaysian Transmission Project Cost Evidence

Cost Normalisation and Land

Citation

Malaysia Data Centre Observatory (MDCO). A10.02 — Electricity Costs Behind Malaysia’s Data Centres – Establishing Unit Costs for the Connection Charge. MDCO Analyse Series.

MDCO Note

This article forms part of the Malaysia Data Centre Observatory (MDCO) Analyse Series, including the A10 and A10.xx series on the electricity costs and cost-recovery mechanisms associated with data centre development. The series aims to improve public understanding through evidence-based, accessible and balanced analysis. It is intended for educational and informational purposes only and does not constitute legal, engineering, financial, regulatory or professional advice.

The cost of supplying electricity to large data centres involves multiple disciplines and perspectives, including electrical engineering, energy economics, utility regulation, infrastructure planning, finance and public policy. MDCO does not advocate for or against any particular stakeholder, project, technology, tariff or regulatory position. Its role is to facilitate transparency, reduce information asymmetry and support informed discussion by examining how electricity infrastructure is provided, paid for and ultimately recovered through the electricity system, using publicly verifiable information and clearly stated assumptions.

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