A10.05 — Electricity Costs Behind Malaysia’s Data Centres – Net Present Value of Electricity Revenue of TNB
Key Takeaways
- A10.05 — Electricity Costs Behind Malaysia’s Data Centres – Net Present Value of Electricity Revenue of TNB takes the 15-year electricity revenue profile established in A10.04 and converts it into an illustrative net-revenue and present-value framework for the 300 MW reference data centre.
- TNB’s published 1st Principle methodology determines the return from electricity sales by deducting Running Cost and relevant consumer-related charges from revenue, then calculating the present value of the resulting future cash flow over the applicable supply period. TNB’s 2025 worked example uses a 15-year period and a 7.3% WACC.
- For the MDCO reference case, applying the published RM0.3333/kWh Running Cost benchmark to the projected 15-year electricity consumption produces an illustrative Running Cost of approximately RM7.020 billion. TNB notes that Running Cost is subject to revision according to the tariff category and regulatory period.
- After deducting Running Cost from the projected electricity revenue, the reference case produces approximately RM5.778 billion of cumulative nominal net revenue over 15 years, before discounting future cash flows to present value.
- The low load-take scenario produces approximately RM3.231 billion of cumulative nominal net revenue after allowing for its lower electricity revenue, lower Running Cost and the additional CLC revenue generated during the first six years.
- Applying an illustrative 7.3% discount rate to the year-by-year net-revenue streams gives an estimated present value of approximately RM3.260 billion for the reference case and RM1.769 billion for the low load-take scenario. The year-by-year calculation is used because the reference case does not generate a constant annual net-revenue amount. TNB’s published methodology likewise uses WACC to determine the present value of future cash flow.
- The difference between the two scenarios is therefore approximately RM1.491 billion in present-value terms, illustrating how actual load take-up can materially affect the revenue available to support the recovery of electricity-supply infrastructure investment.
Parent article: A10 — Who Pays for the Electricity Behind Malaysia’s Data Centres?
From Gross Revenue to Net Revenue
→A10.04 established the gross electricity revenue that could be generated by the 300 MW reference data centre over a 15-year period. The reference case assumes a Final Maximum Demand (MD) of 300 MW, an analytical load-pick-up profile during the first four years, an Effective MD thereafter, and a consistent 70% load factor when calculating electricity consumption over the 15-year period. On these assumptions, the reference case consumes approximately 21.063 TWh of electricity and generates approximately RM12.798 billion of gross electricity revenue over the 15 years.
Gross electricity revenue, however, is not the same as the financial return available to support the electricity infrastructure associated with serving the consumer. Electricity has to be generated, transmitted, distributed and supplied, and TNB’s 1st Principle methodology therefore recognises a cost associated with providing that electricity service.
For the purposes of this analysis, the relationship can be expressed conceptually as:
Gross electricity revenue − Running Cost = Net revenue
The treatment of Running Cost follows the structure used by TNB in its 1st Principle Connection Charge methodology. In TNB’s published worked example, annual electricity revenue is reduced by the applicable Running Cost and consumer-related charges before the resulting future cash flow is converted into present value.
CLC is a charge payable by the consumer when the actual Maximum Demand recorded during the applicable CLC period falls below the Reference Maximum Demand. In a low load-take scenario, it therefore represents an additional revenue stream to TNB.
This distinction is important. A reduction in electricity consumption reduces electricity revenue, while CLC may generate additional revenue where the consumer does not achieve the applicable demand level. The two effects therefore need to be considered separately when assessing the overall revenue associated with the consumer.
The objective of this article is consequently to move from the gross electricity revenue established in →A10.04 to an annual net-revenue stream and then to its present value over the 15-year period.
MDCO Insight: Gross electricity revenue is only one component of the future financial contribution associated with supplying a large data centre.
What Is “Running Cost”?
In the context of TNB’s 1st Principle calculation, Running Cost represents the cost associated with providing electricity supply to the consumer. It is an input used to determine the future cash flow generated by the consumer and should therefore not be interpreted simply as TNB’s corporate accounting expenditure or as the operating cost of one particular piece of electricity infrastructure.
This distinction matters because the electricity system serving a large data centre is a connected system. The cost of supplying electricity can involve elements of generation, transmission, distribution and other regulated electricity-system functions. The Incentive-Based Regulation (IBR) framework provides the wider regulatory basis under which the costs and returns associated with these functions are determined.
Running Cost should therefore be distinguished from several other financial quantities used in this analysis.
Project Cost refers to the capital investment attributable to the consumer’s electricity supply. In →A10.03, MDCO established an analytical Project Cost and associated asset-value framework for the 300 MW reference case.
Running Cost refers to the cost associated with supplying electricity to the consumer over the period during which electricity is purchased. It is therefore linked to electricity consumption rather than being a one-time infrastructure investment.
Revenue refers to the amounts generated from electricity supplied to the consumer under the applicable tariff structure. In →A10.04, this comprised energy, capacity, network and retail charges.
Connected Load Charge (CLC) is a separate charge associated with the consumer’s Maximum Demand during the initial period following connection. It arises when actual recorded Maximum Demand falls below the applicable Reference Maximum Demand. It is not part of the Running Cost used to calculate the cost of supplying each kilowatt-hour of electricity.
Weighted Average Cost of Capital (WACC) is different again. It is not a cost deducted from each unit of electricity consumed. Rather, it is the discount rate used to convert future cash flows into their present value for the purposes of the 1st Principle assessment.
The distinction can therefore be summarised as:
Project Cost
→ capital investment associated with supplying the consumer
Revenue
→ income generated from electricity supplied
Running Cost
→ cost associated with supplying that electricity
CLC
→ separate additional charge where the applicable demand threshold is not achieved
WACC
→ discount rate applied to the resulting future cash-flow stream
The purpose of this article is to establish the annual cash-flow stream after accounting for the cost of supplying electricity. That stream can then be discounted to present value and, in the subsequent article, compared with the Project Cost established in →A10.03.
Published TNB Running-Cost Benchmark
The most useful publicly available benchmark for this analysis is contained in TNB’s Connection Charges Book 2025.
In its worked example for a Non-Domestic High Voltage Time-of-Use (ToU) consumer, TNB identifies the Running Cost as:
RM0.3333/kWh
The example assumes annual electricity sales of 315.36 million kWh. The Running Cost is therefore calculated as:
315.36 million kWh × RM0.3333/kWh
= RM105.109 million
TNB then deducts this Running Cost from the annual electricity revenue, together with the separately identified consumer-related charge, before calculating the present value of the resulting future cash flow.
Importantly, TNB states that the Running Cost is subject to revision according to the tariff category and regulatory period. The RM0.3333/kWh figure should therefore not be interpreted as a permanent or universal TNB Running Cost applicable to every High Voltage consumer.
MDCO analytical treatment
For the purposes of the reference case in this article, MDCO adopts:
Running Cost = RM0.3333/kWh
as the illustrative Running Cost benchmark.
The rate is held constant throughout the calculations in this article, and its status as an analytical benchmark is clearly recognised.
The 275-kV Reference Supply
The reference case continues to assume that the 300 MW data centre is supplied at 275 kV.
The 275-kV assumption is an analytical reference condition, carried forward from the infrastructure and costing analysis in A10.03, rather than a determination of the supply scheme for any particular project.
Running Cost of the Reference Case
The reference case established in →A10.04 assumes total electricity consumption of approximately 21.063 TWh over the 15-year period.
Applying the TNB-published Running Cost benchmark:
21.063 billion kWh × RM0.3333/kWh
gives a cumulative Running Cost of approximately:
RM7.020 billion
over the 15-year period.
The calculation is based directly on the annual electricity consumption derived from the Effective MD and the 70% load factor established in →A10.04. Because the reference case has a staged load-pick-up profile, the Running Cost is not constant during the first four years. It increases as the data centre’s Effective MD increases and reaches its steady-state level from Year 5 onwards.
The resulting annual profile is:
| Year | Effective MD | Annual Energy | Running Cost |
|---|---|---|---|
| Y1 | 90 MW | 551.88 GWh | ~RM183.9m |
| Y2 | 135 MW | 827.82 GWh | ~RM275.9m |
| Y3 | 180 MW | 1,103.76 GWh | ~RM367.9m |
| Y4 | 225 MW | 1,379.70 GWh | ~RM459.8m |
| Y5–Y15 | 255 MW | 1,563.66 GWh/year | ~RM521.2m/year |
The final calculations will use the unrounded annual energy figures generated by the underlying model. The rounded values shown above are intended to make the scale and progression of the Running Cost transparent.
At the steady-state Effective MD of 255 MW, the data centre is assumed to consume approximately 1.564 TWh per year. Applying the RM0.3333/kWh benchmark produces a Running Cost of approximately RM521 million per year.
The significance of this calculation is that the RM12.798 billion gross electricity revenue established in →A10.04 cannot be treated as the full future financial contribution available from the consumer. Approximately RM7.020 billion of that revenue represents the illustrative cost associated with supplying the corresponding electricity under the adopted Running Cost benchmark.
The difference between the gross electricity revenue and this Running Cost provides the starting point for establishing the net revenue stream in the next section of the analysis.
MDCO Insight: Applying the published TNB Running Cost benchmark converts the 300 MW reference case from a gross-revenue model into a net-revenue framework, while keeping the calculation transparent and reproducible.
Reference-Case Net Revenue
A10.04 established the projected gross electricity revenue generated by the 300 MW reference data centre over the 15-year supply period. The next step is to consider the cost associated with supplying that electricity.
For the reference case, the basic relationship is:
Gross electricity revenue + CLC revenue − Running Cost = Net revenue
The reference case generates no CLC revenue because its Effective Maximum Demand remains above the applicable CLC Reference Maximum Demand throughout the modelled period.
The principal figures are therefore:
| Measure | Reference Case |
|---|---|
| Gross electricity revenue | ~RM12.798bn |
| CLC revenue | RM0 |
| Running Cost | ~RM7.020bn |
| Net revenue | ~RM5.778bn |
The Running Cost is calculated using the published benchmark of RM0.3333/kWh applied to the reference case’s projected electricity consumption of 21.063 TWh over 15 years. The resulting Running Cost is approximately RM7.020 billion.
The difference between gross revenue and Running Cost gives an indicative cumulative net revenue of approximately RM5.778 billion before discounting and before any other separately modelled charges or costs.
The absence of CLC revenue provides a clean baseline for comparison. In the low load-take scenario considered later in this article, electricity consumption falls substantially and therefore gross electricity revenue falls. However, the associated Running Cost also falls, while CLC revenue may arise during the six-year CLC period. The comparison therefore needs to consider all three elements rather than simply comparing gross electricity revenue.
MDCO Insight: For the reference case, approximately RM5.8 billion of the projected 15-year gross electricity revenue remains after applying the published Running Cost benchmark, before discounting.
Low Load-Take / Stress Scenario
→A10.04 introduced a low load-take scenario to examine the effect of substantially lower electricity consumption than assumed in the 300 MW reference case.
The scenario assumes:
- actual MD of 30 MW in Years 1–3;
- actual MD of 150 MW in Years 4–15;
- a consistent 70% load factor;
- the same electricity tariff assumptions used for the reference case;
- the same RM0.3333/kWh Running Cost benchmark; and
- the same 15-year supply period.
This is an analytical low load-take scenario, not a forecast of how a particular data centre would operate.
The purpose is to examine the financial effect on the electricity system if a large declared load takes up substantially less electricity than the reference case assumes. Such a difference could arise for many reasons, including slower development, delayed commissioning, lower IT deployment, phased occupancy or other changes in the consumer’s actual electricity demand.
The scenario is intentionally designed as a stress case for the revenue analysis. It does not imply that a 300 MW data centre will necessarily operate at these demand levels.
Under the 70% load-factor assumption, the resulting 15-year electricity consumption is approximately 11.589 TWh, compared with 21.063 TWh in the reference case.
The lower consumption directly reduces the electricity revenue generated over the period. It also reduces the Running Cost associated with supplying that electricity. In addition, the substantially lower actual MD creates CLC shortfalls during the six-year CLC period under the assumptions carried forward from A10.04.
The low load-take case therefore provides a useful stress test of the relationship between electricity consumption, electricity revenue, Running Cost and CLC revenue.
CLC Revenue Under the Low Load-Take Scenario
The CLC calculation follows the framework established in →A10.04. TNB currently states that CLC for a new consumer applies for six years, with the Reference Maximum Demand determined according to the applicable declared and recorded Maximum Demand. The current published CLC rate is RM8.50/kW for each kW of shortfall, calculated monthly and subject to prevailing changes.
For this analytical scenario, the declared MD profile remains:
- Year 1: 100 MW
- Year 2: 150 MW
- Year 3: 200 MW
- Year 4: 250 MW
- Years 5–6: 300 MW
The actual MD is assumed to be 30 MW in Years 1–3 and 150 MW from Year 4 onwards.
The resulting CLC revenue is:
| Year | Declared MD | Actual MD | RMD | CLC Shortfall | Annual CLC Revenue |
|---|---|---|---|---|---|
| Y1 | 100 MW | 30 MW | 85 MW | 55 MW | RM5.610m |
| Y2 | 150 MW | 30 MW | 127.5 MW | 97.5 MW | RM9.945m |
| Y3 | 200 MW | 30 MW | 170 MW | 140 MW | RM14.280m |
| Y4 | 250 MW | 150 MW | 212.5 MW | 62.5 MW | RM6.375m |
| Y5 | 300 MW | 150 MW | 225 MW | 75 MW | RM7.650m |
| Y6 | 300 MW | 150 MW | 225 MW | 75 MW | RM7.650m |
| Total | RM51.510m |
The calculation is based on the CLC rate of RM8.50/kW. For example, in Year 5 the Reference Maximum Demand is 225 MW and the assumed actual MD is 150 MW. The shortfall is therefore 75 MW, or 75,000 kW. At RM8.50/kW per month, this gives:
75,000 kW × RM8.50/kW = RM637,500 per month
or:
RM637,500 × 12 = RM7.650 million per year.
For this illustrative annual calculation, the stated actual MD is assumed to represent the relevant recorded monthly MD for the year. This follows the simplifying assumption used in →A10.04; TNB’s published example similarly explains its CLC calculation using an actual MD recorded in one month within a CLC year.
The resulting cumulative CLC revenue over Years 1–6 is therefore:
Total CLC revenue = RM51.510 million
No CLC revenue is included from Year 7 onwards because the new-consumer CLC period has ended under the six-year framework.
The CLC revenue is included as an additional revenue item in the MDCO net-revenue model. It is not treated as a reduction in Running Cost.
Running Cost Under the Low Load-Take Scenario
The same Running Cost benchmark used for the reference case is applied to the low load-take scenario.
The low-load scenario consumes approximately 11.589 TWh over the 15-year period. Applying the benchmark of RM0.3333/kWh gives:
11.589 billion kWh × RM0.3333/kWh
≈ RM3.863 billion
The underlying calculation gives approximately RM3.8626 billion, which is rounded here to RM3.863 billion.
This is substantially lower than the approximately RM7.020 billion Running Cost associated with the reference case.
The difference illustrates an important feature of the analysis. Lower electricity consumption does not reduce revenue alone. It also reduces the estimated cost associated with supplying that electricity when the Running Cost is modelled on a per-kWh basis.
The financial effect therefore operates in two directions:
- lower electricity consumption reduces electricity revenue; and
- lower electricity consumption also reduces the associated Running Cost.
Consequently, the reduction in net revenue is smaller than the reduction in gross electricity revenue.
This does not mean that all electricity-system costs would necessarily fall in direct proportion to consumption. The RM0.3333/kWh benchmark is an analytical Running Cost measure adopted for this model. Actual electricity-system costs include components with different cost behaviours, and the relationship between system costs and consumer demand can be more complex.
The purpose here is therefore not to claim that the entire cost of the electricity system varies proportionately with electricity consumption, but to apply a consistent published benchmark to both scenarios so that their relative financial effects can be examined on a common basis.
Low Load-Take Net Revenue
The low load-take case can now be brought together using the same relationship established for the reference case:
Gross electricity revenue + CLC revenue − Running Cost
= Net revenue
The three principal components are:
- Gross electricity revenue: ~RM7.042bn
- CLC revenue: RM51.510m
- Running Cost: ~RM3.863bn
Using the underlying annual model, the resulting cumulative net revenue is approximately:
RM7.042bn + RM0.05151bn − RM3.863bn
≈ RM3.231bn
The comparison with the reference case is therefore:
| Measure | Reference Case | Low Load-Take Case |
|---|---|---|
| Gross electricity revenue | ~RM12.798bn | ~RM7.042bn |
| Running Cost | ~RM7.020bn | ~RM3.863bn |
| CLC revenue | RM0 | RM51.510m |
| Net revenue | ~RM5.778bn | ~RM3.231bn |
The low load-take scenario therefore produces substantially less cumulative net revenue over the 15-year period than the reference case.
The difference is smaller than the gross electricity-revenue difference because the low load-take scenario also incurs substantially lower Running Cost. The CLC mechanism provides a further RM51.510 million of revenue during the first six years, but this is small relative to the multi-billion-ringgit reduction in electricity revenue.
The comparison also demonstrates why the analysis should not treat the CLC as a deduction from electricity revenue. Under the MDCO treatment, CLC is an additional revenue stream generated during the CLC period. TNB separately identifies CLC as a charge applicable after commissioning, alongside other high-voltage charges.
The figures at this stage remain cumulative nominal amounts. They do not yet represent the economic value of the future revenue stream because revenue received in later years is not equivalent in present-value terms to revenue received today.
That distinction becomes important in the next stage of the analysis, where the annual net-revenue stream is converted into a present-value measure.
MDCO Insight: Lower load reduces the electricity system’s gross revenue, but it also reduces the associated Running Cost; CLC provides a further, separate revenue stream during the CLC period.
A cumulative figure treats a ringgit received in Year 1 as having the same value as a ringgit received in Year 15. In financial analysis, however, future cash flows are discounted because a ringgit received today has greater present value than a ringgit received many years in the future.
Therefore, each year’s revenue is identified separately, discounted according to the number of years until it is received, and then summed to produce the present value.
TNB’s published Connection Charges Book illustrates this approach. Its 2025 worked example uses a 7.3% WACC.
Present-Value Methodology
A cumulative figure treats a ringgit received in Year 1 as having the same value as a ringgit received in Year 15. In financial analysis, however, future cash flows are discounted because a ringgit received today has greater present value than a ringgit received many years in the future.
Therefore, each year’s revenue is identified separately, discounted according to the number of years until it is received, and then summed to produce the present value.
TNB’s published Connection Charges Book illustrates this approach. Its 2025 worked example uses a 7.3% WACC. The use of 7.3% in this article is therefore an analytical assumption based on a published TNB example. It should not be interpreted as a prediction that 7.3% will remain the applicable WACC for every future regulatory period.
This distinction is important because the purpose of A10.05 is to establish an analytical framework using an observable published benchmark. Actual future Connection Charge calculations would use the applicable regulatory parameters at the relevant time.
The calculation also means that the annual net-revenue figures, rather than only the cumulative 15-year total, must be retained in the model.
For example, a net revenue of RM100 million received in Year 1 is discounted by one year, while RM100 million received in Year 15 is discounted by fifteen years. At 7.3%, the corresponding discount factors are approximately 0.932 for Year 1 and 0.348 for Year 15.
For example for Year 1,
Discount Factor = 1 / (1+r)t
where
r = 7.3% = 0.073
t = 1
Therefore:
Discount Factor = 1 / (1+0.073)1 = 0.93197 ≈ 0.932
This difference is the reason that the present value of the revenue stream is materially lower than its cumulative nominal value.
Present Value — Reference Case
The reference-case annual net revenue is calculated as:
Gross electricity revenue − Running Cost = Net revenue
No CLC revenue arises in the reference case under the assumptions established earlier.
The resulting annual net-revenue stream before discounting is:
| Year | Gross Electricity Revenue | Running Cost | CLC Revenue | Net Revenue |
|---|---|---|---|---|
| Y1 | RM335.330m | RM183.976m | — | RM151.354m |
| Y2 | RM502.993m | RM275.855m | — | RM227.138m |
| Y3 | RM670.657m | RM367.733m | — | RM302.924m |
| Y4 | RM838.320m | RM459.611m | — | RM378.709m |
| Y5 | RM950.096m | RM521.238m | — | RM428.858m |
| Y6 | RM950.096m | RM521.238m | — | RM428.858m |
| Y7 | RM950.096m | RM521.238m | — | RM428.858m |
| Y8 | RM950.096m | RM521.238m | — | RM428.858m |
| Y9 | RM950.096m | RM521.238m | — | RM428.858m |
| Y10 | RM950.096m | RM521.238m | — | RM428.858m |
| Y11 | RM950.096m | RM521.238m | — | RM428.858m |
| Y12 | RM950.096m | RM521.238m | — | RM428.858m |
| Y13 | RM950.096m | RM521.238m | — | RM428.858m |
| Y14 | RM950.096m | RM521.238m | — | RM428.858m |
| Y15 | RM950.096m | RM521.238m | — | RM428.858m |
| Total | RM12.798bn | RM7.020bn | — | RM5.778bn |
In TNB’s 2025 Connection Charges Book worked example, the retail charge is RM250 per month, or RM3,000 per year. It is therefore a relatively small fixed component and ignored in the above calculation.
The resulting annual net-revenue stream is:
| Year | Net Revenue | Discount Factor @ 7.3% | Present Value |
|---|---|---|---|
| Y1 | RM151.354m | 0.931966 | RM141.089m |
| Y2 | RM227.138m | 0.868561 | RM197.234m |
| Y3 | RM302.924m | 0.809470 | RM245.086m |
| Y4 | RM378.709m | 0.754399 | RM285.515m |
| Y5 | RM428.858m | 0.703075 | RM301.568m |
| Y6 | RM428.858m | 0.655242 | RM281.052m |
| Y7 | RM428.858m | 0.610663 | RM261.931m |
| Y8 | RM428.858m | 0.569118 | RM244.111m |
| Y9 | RM428.858m | 0.530399 | RM227.503m |
| Y10 | RM428.858m | 0.494314 | RM212.025m |
| Y11 | RM428.858m | 0.460684 | RM197.600m |
| Y12 | RM428.858m | 0.429342 | RM184.157m |
| Y13 | RM428.858m | 0.400132 | RM171.628m |
| Y14 | RM428.858m | 0.372910 | RM159.952m |
| Y15 | RM428.858m | 0.347539 | RM149.069m |
| Total | RM5.778bn | RM3.260bn |
The calculation produces:
Present Value of Reference-Case Net Revenue = approximately RM3.260 billion
This is substantially below the cumulative nominal net revenue of approximately RM5.778 billion.
The difference does not represent a reduction in the amount of revenue actually received. Rather, it represents the effect of expressing future revenue in present-value terms using the assumed 7.3% discount rate.
The result is an important analytical bridge between the revenue analysis in →A10.04 and the infrastructure-cost analysis in →A10.03. It established an indicative attributable infrastructure cost for the reference case, while A10.05 now establishes the present value of the future net revenue associated with supplying the data centre.
The two figures can subsequently be brought together when the Connection Charge calculation is examined.
MDCO Insight: The reference case generates approximately RM5.778 billion of cumulative nominal net revenue, but its 15-year present value at 7.3% is approximately RM3.260 billion.
Present Value — Low Load-Take Scenario
The same methodology is applied to the low load-take scenario.
For each year:
Net Revenue = Gross Electricity Revenue + CLC Revenue − Running Cost
The CLC revenue is included in Years 1–6 because the low load-take assumptions produce a shortfall against the applicable Reference Maximum Demand during the CLC period.
| Year | Gross Electricity Revenue | Running Cost | CLC Revenue | Net Revenue |
|---|---|---|---|---|
| Y1 | RM111.779m | RM61.314m | RM5.610m | RM56.075m |
| Y2 | RM111.779m | RM61.314m | RM9.945m | RM60.410m |
| Y3 | RM111.779m | RM61.314m | RM14.280m | RM64.745m |
| Y4 | RM558.881m | RM306.569m | RM6.375m | RM258.687m |
| Y5 | RM558.881m | RM306.569m | RM7.650m | RM259.962m |
| Y6 | RM558.881m | RM306.569m | RM7.650m | RM259.962m |
| Y7 | RM558.881m | RM306.569m | — | RM252.312m |
| Y8 | RM558.881m | RM306.569m | — | RM252.312m |
| Y9 | RM558.881m | RM306.569m | — | RM252.312m |
| Y10 | RM558.881m | RM306.569m | — | RM252.312m |
| Y11 | RM558.881m | RM306.569m | — | RM252.312m |
| Y12 | RM558.881m | RM306.569m | — | RM252.312m |
| Y13 | RM558.881m | RM306.569m | — | RM252.312m |
| Y14 | RM558.881m | RM306.569m | — | RM252.312m |
| Y15 | RM558.881m | RM306.569m | — | RM252.312m |
| Total | RM7.042bn | RM3.863bn | RM51.510m | RM3.231bn |
The annual net-revenue stream is therefore lower than the reference case, but it includes the additional CLC revenue during the first six years.
| Year | Net Revenue | Discount Factor @ 7.3% | Present Value |
|---|---|---|---|
| Y1 | RM56.075m | 0.931966 | RM52.260m |
| Y2 | RM60.410m | 0.868561 | RM52.470m |
| Y3 | RM64.745m | 0.809470 | RM52.409m |
| Y4 | RM258.687m | 0.754399 | RM195.153m |
| Y5 | RM259.962m | 0.703075 | RM182.773m |
| Y6 | RM259.962m | 0.655242 | RM170.338m |
| Y7 | RM252.312m | 0.610663 | RM154.078m |
| Y8 | RM252.312m | 0.569118 | RM143.595m |
| Y9 | RM252.312m | 0.530399 | RM133.826m |
| Y10 | RM252.312m | 0.494314 | RM124.721m |
| Y11 | RM252.312m | 0.460684 | RM116.236m |
| Y12 | RM252.312m | 0.429342 | RM108.328m |
| Y13 | RM252.312m | 0.400132 | RM100.958m |
| Y14 | RM252.312m | 0.372910 | RM94.090m |
| Y15 | RM252.312m | 0.347539 | RM87.688m |
| Total | RM3.231bn | RM1.769bn |
The calculation produces:
Present Value of Low Load-Take Net Revenue = approximately RM1.769 billion
The low load-take scenario therefore has a present value of future net revenue that is substantially below that of the reference case.
The difference reflects three interacting effects:
- substantially lower electricity consumption;
- correspondingly lower gross electricity revenue and Running Cost; and
- additional CLC revenue during Years 1–6.
The CLC revenue is included in the annual net-revenue stream before discounting. It therefore contributes to the present value, but its contribution is limited relative to the much larger reduction in electricity revenue caused by the lower load take-up.
The present-value calculation also illustrates why comparing only the cumulative nominal revenue figures can be misleading. Timing matters. Revenue received in the early years contributes more to present value than an equivalent amount received near the end of the 15-year period.
MDCO Insight: Under the low load-take assumptions, the 15-year cumulative net revenue is approximately RM3.231 billion, but its present value at 7.3% is approximately RM1.769 billion.
Reference Case Versus Low Load-Take Case
The two scenarios can now be compared on both a cumulative and present-value basis.
| Measure | Reference Case | Low Load-Take Case | Difference |
|---|---|---|---|
| 15-year electricity consumption | 21.063 TWh | 11.589 TWh | −9.474 TWh |
| Gross electricity revenue | RM12.798bn | RM7.042bn | −RM5.756bn |
| Running Cost | ~RM7.020bn | ~RM3.863bn | −~RM3.157bn |
| CLC revenue | — | RM51.510m | +RM51.510m |
| Cumulative net revenue | ~RM5.778bn | ~RM3.231bn | −~RM2.547bn |
| Present Value of net revenue | RM3.260bn | RM1.769bn | −RM1.491bn |
The comparison shows that the lower load-take scenario has a materially smaller future revenue contribution to the electricity system.
The gross electricity-revenue difference is approximately RM5.756 billion over 15 years. However, the difference in cumulative net revenue is smaller, at approximately RM2.547 billion, because the low load-take scenario also reduces the Running Cost associated with supplying the lower volume of electricity.
The CLC adds a further RM51.510 million of revenue to the low load-take case during Years 1–6. It is therefore included as revenue in the low-load calculation rather than being netted against the CLC shortfall or treated as a cost.
After discounting, the difference between the two revenue streams becomes approximately RM1.491 billion in present-value terms.
This is the principal financial comparison established by A10.05.
It should nevertheless be interpreted carefully. The present value is not itself the Connection Charge. It represents the estimated present value of the future net revenue stream under the assumptions adopted in this article.
The Connection Charge analysis requires another step: comparing the relevant present value of future cash flows with the Project Cost associated with providing the connection and the applicable electricity infrastructure. TNB’s current Connection Charge framework describes the 1st Principle approach in terms of the relationship between Present Value Future Cash Flow and Project Cost.
A10.05 therefore establishes the revenue side of that comparison, while leaving the actual Connection Charge calculation to the next stage of the A10 series.
The distinction is particularly important because the infrastructure cost established in →A10.03 and the present value established here are not directly interchangeable without applying the relevant Connection Charge methodology, asset attribution rules and other applicable parameters.
MDCO Insight: The reference case produces a present value of approximately RM3.260 billion, compared with approximately RM1.769 billion under the low load-take scenario—a difference of approximately RM1.491 billion in present-value terms.
What the Present Value Does — and Does Not — Represent
The present-value calculation provides the financial measure needed to move from the projected electricity revenue stream towards the 1st Principle analysis. It is nevertheless important to distinguish present value from both the infrastructure investment and the cumulative revenue generated over the 15-year period.
Three different quantities are involved.
Project Cost
Project Cost is the capital investment attributable to providing the required electricity supply infrastructure for the consumer.
In →A10.03, MDCO developed an analytical estimate of the infrastructure cost associated with supplying the 300 MW reference data centre, including the treatment of existing and new infrastructure and the allocation of shared assets.
Project Cost is therefore a capital-investment measure.
It represents the investment against which the future financial return from supplying the consumer can subsequently be assessed.
Cumulative Net Revenue
Cumulative net revenue is the total nominal revenue remaining over the 15-year period after applying the Running Cost and, in the low load-take scenario, adding the CLC revenue generated during the applicable CLC period.
For the reference case, the cumulative net revenue is approximately RM5.8 billion.
For the low load-take scenario, it is approximately RM3.2 billion.
These figures are cumulative nominal amounts. They add together the annual net revenue without adjusting for the different times at which the revenue is received.
A ringgit received in Year 1 and a ringgit received in Year 15 therefore contribute equally to the cumulative figure, even though they do not have equal financial value in present-day terms.
Present Value of Net Revenue
Present Value of net revenue is the value today of the future annual net-revenue stream after applying the selected discount rate to each year’s cash flow.
For this article, the annual net revenue is discounted at the 7.3% WACC adopted as the analytical benchmark from TNB’s published 2025 Connection Charges Book example.
The resulting present value is therefore a time-adjusted financial measure.
It is not the amount of electricity revenue received by TNB, nor is it the cumulative amount of net revenue received over the 15-year period.
Most importantly, the present value is not yet the Connection Charge.
The present value represents the estimated value today of the future net-revenue stream generated by the consumer. The Connection Charge analysis requires that value to be considered together with the Project Cost attributable to supplying the consumer.
The distinction can therefore be expressed simply as:
Project Cost
= capital investment attributable to supplying the consumer.
Cumulative net revenue
= total nominal revenue remaining after Running Cost over 15 years.
Present Value of net revenue
= today’s value of those future annual net revenues.
These are three different measures serving different purposes.
A10.05 establishes the third measure so that it can be compared with the first in the next stage of the A10 analysis.
MDCO Insight: Present value is not another name for cumulative net revenue; it is the time-adjusted value of the future annual net-revenue stream and is the measure required for the next stage of the Connection Charge analysis.
Preparing for the Connection Charge Calculation
The A10 series has progressively developed the two sides of the financial relationship behind a large data centre’s electricity connection.
A10.03 established:
Project Cost
The analysis examined the infrastructure associated with supplying the 300 MW reference data centre and developed an analytical estimate of the attributable Project Cost.
A10.04 established:
Gross electricity revenue
The analysis projected electricity consumption and the resulting electricity revenue over the 15-year supply period.
A10.05 now establishes:
Net revenue → Present Value of net revenue
The gross electricity revenue is reduced by the Running Cost associated with supplying the electricity. In the low load-take scenario, CLC revenue is separately added to the revenue stream. The resulting annual net-revenue amounts are then discounted to present value.
The next article can therefore bring the two principal sides together:
Project Cost
versus
Present Value of Future Net Revenue
This is the central financial comparison underlying the 1st Principle methodology.
TNB’s published Connection Charge framework states that, for a high-voltage consumer subject to the 1st Principle calculation, the Present Value of Future Cash Flow is compared with the Project Cost. Where the present value is lower than the Project Cost, a Connection Charge is payable based on the shortfall. TNB’s published framework also provides for a Refundable Connection Charge (RCC) where the present value exceeds the Project Cost, subject to the applicable conditions.
The simplified relationship is therefore:
If Present Value of Future Cash Flow < Project Cost
→ Connection Charge
whereas, under the published framework:
If Present Value of Future Cash Flow > Project Cost
→ No Connection Charge, with RCC applying subject to the stated conditions.
The comparison is more meaningful than simply comparing infrastructure cost with electricity sales.
Infrastructure represents an upfront or early capital requirement. Electricity revenue is generated progressively over the period of supply. Running Cost must also be allowed for before the future revenue stream can be considered as the return associated with the investment.
The present-value calculation therefore provides the bridge between these two different financial dimensions.
A10.05 deliberately stops at this point.
It does not calculate the Connection Charge.
Instead, it establishes the analytical Present Value of Future Net Revenue that can be compared with the attributable Project Cost in the next article.
Analytical Boundaries and Limitations
The calculations in A10.05 should be understood as an analytical model based on published benchmarks and stated assumptions. They are not a TNB quotation, forecast or determination of the Connection Charge for any actual data centre.
Several boundaries are particularly important.
Running Cost benchmark. The RM0.3333/kWh Running Cost used in the model is the benchmark published by TNB in its 2025 Connection Charges Book worked example for the High Voltage ToU tariff. TNB expressly states that Running Cost is subject to revision according to the applicable tariff category and regulatory period.
WACC. The 7.3% WACC used for the present-value calculation is the rate adopted in TNB’s published 2025 worked example. TNB states that the WACC is subject to changes according to the regulatory period. The 7.3% rate is therefore an analytical benchmark for this article, not an assumption that the same rate will necessarily apply throughout the 15-year period.
Hypothetical reference case. The 300 MW reference data centre is hypothetical. It provides a consistent analytical reference point and does not represent an actual project, supply application or TNB quotation.
Load-pick-up schedule. The progression from 100 MW in Year 1 to 300 MW from Year 5 onwards is an MDCO analytical assumption. It is not presented as a standard TNB load-pick-up schedule applicable to data centres generally.
Load factor. The 70% load factor is also an MDCO analytical assumption. It is used consistently to convert the assumed Effective MD into annual electricity consumption.
Effective MD. The Effective MD used in the revenue and Running Cost calculations is an analytical construct developed for this article. It is not a separate TNB billing category or a substitute for the actual Maximum Demand used for tariff or CLC purposes.
Low load-take scenario. The 30 MW / 150 MW scenario is a defined analytical stress scenario, not a forecast of actual data-centre operation. Its purpose is to test the sensitivity of the financial outcome to substantially lower electricity take-up.
CLC. CLC is calculated using the applicable TNB rules and prevailing rate. The RM51.510 million of CLC revenue calculated in this article is specific to the declared MD, assumed actual MD and other assumptions of the low load-take scenario. A different load profile, recorded MD pattern, declared demand or prevailing CLC rate would produce a different result. TNB states that CLC is calculated monthly and that the prevailing rate is subject to change.
Treatment of CLC. For the MDCO model, CLC is treated as additional TNB revenue in the low load-take scenario. It is not treated as Running Cost and is not deducted from gross electricity revenue.
This treatment is intended to make the analytical question explicit: how much revenue remains available to the electricity system after the estimated cost of supplying the electricity, including any additional CLC revenue arising under the assumed low-load conditions?
This treatment should not, however, be interpreted as meaning that CLC economically replaces the electricity revenue lost through lower consumption.
CLC is a separate charge arising from the CLC mechanism. It does not make the electricity system financially indifferent to a substantial reduction in electricity consumption.
Tariff and Running Cost assumptions. The electricity tariff assumptions and the RM0.3333/kWh Running Cost benchmark are held constant across the 15-year analytical period. In practice, tariffs and Running Cost may change between regulatory periods.
AFA. The Additional Fuel Adjustment (AFA) is not separately projected in this analysis. The purpose is to establish a consistent analytical revenue and Running Cost stream rather than forecast future generation-cost adjustments.
Present-value result. The resulting Present Value of Future Net Revenue is an analytical estimate derived from the assumptions stated in this article. It is not a determination by TNB of the Present Value of Future Cash Flow for an actual consumer and should not be interpreted as a Connection Charge calculation.
These limitations do not invalidate the analytical exercise. Rather, they define what the figures are intended to show: the financial relationship between electricity consumption, electricity revenue, Running Cost, CLC revenue and the time value of future net revenue under a clearly stated set of assumptions.
MDCO Insight: The present value calculated here is a conditional analytical measure of the future net revenue associated with the reference data centre; it becomes meaningful for Connection Charge analysis only when compared with the attributable Project Cost.
The Observatory Perspective
The →A10 series has approached the electricity question from three progressively connected perspectives.
→A10.03 asks:
What infrastructure investment is associated with supplying the data centre?
The answer begins with the physical electricity system: transmission assets, substations, switching facilities, connections, land and other infrastructure required to provide the supply. It then asks how the resulting infrastructure value or cost should be attributed to the consumer.
→A10.04 asks:
How much gross electricity revenue does the data centre generate?
The answer depends on the consumer’s electricity demand, load-pick-up profile, load factor and applicable tariff structure. For the 300 MW reference case, the resulting 15-year electricity consumption and gross electricity revenue establish the revenue side of the analysis.
A10.05 asks:
How much of that revenue remains after the cost of supplying the electricity, and what is the present value of that future net revenue?
This introduces the cost of supplying electricity and the time value of money.
The resulting sequence can therefore be expressed as:
Project Cost ≠ Gross Electricity Revenue ≠ Net Revenue ≠ Present Value
Each represents a different stage of the financial analysis.
For the 300 MW reference case, the data centre produces a substantial long-term electricity revenue stream. But gross electricity revenue is not the same as the financial return available to support the infrastructure investment.
The cost associated with supplying the electricity must first be taken into account.
That produces the net-revenue stream.
The annual net-revenue stream must then be considered in terms of when the revenue is received.
That produces the present value of future net revenue.
Only then can the financial return associated with the consumer be meaningfully compared with the capital investment attributable to supplying that consumer.
The low load-take scenario illustrates the importance of this sequence.
Lower electricity consumption reduces gross electricity revenue. At the same time, under the per-kWh Running Cost assumption used in this analysis, it also reduces the associated Running Cost.
During the six-year CLC period, the lower actual MD may additionally generate CLC revenue where it falls below the applicable Reference Maximum Demand. In the MDCO model, that CLC is treated as additional TNB revenue rather than as a deduction from electricity revenue.
The financial effect is therefore not captured by looking at electricity sales alone.
The relevant comparison for the next stage is:
Attributable Project Cost versus Present Value of Future Net Revenue
This is the point at which the physical infrastructure analysis in →A10.03 and the revenue analysis in A10.04–A10.05 come together.
TNB’s published 1st Principle methodology makes this same fundamental comparison between Project Cost and Present Value of Future Cash Flow when determining whether a Connection Charge is applicable.
A10.05 therefore completes the revenue-side foundation for the next stage of the analysis.
It does not yet answer how much Connection Charge a 300 MW data centre would pay.
Instead, it establishes the financial quantity that must be brought together with the attributable Project Cost:
Project Cost versus Present Value of Future Net Revenue
The next article can then examine how this relationship operates under the published Connection Charge framework, including the treatment of shared and dedicated infrastructure, the 1st Principle calculation, and the circumstances in which a Connection Charge or RCC may arise.
This progression is important because the question is not simply how much electricity a data centre consumes, nor how much infrastructure it requires.
The deeper question is how the infrastructure investment and the future economic return from that electricity supply relate to one another over time.
That is the financial relationship at the centre of the Connection Charge mechanism.
Selected References
Connection Charge and Revenue Methodology
- Tenaga Nasional Berhad (TNB) – Connection Charges Book 2025, setting out the 1st Principle and Refundable Connection Charge (RCC) methodologies, Project Cost, Annual Revenue, Running Cost, consumer-related charges, WACC, PVIFA and Present Value of Future Cash Flow. The 2025 worked example uses a 7.3% WACC, a 15-year period and a RM0.3333/kWh Running Cost benchmark. https://www.tnb.com.my/assets/files/TNB_Connection_Charges_Book_2025_ENG.pdf
- Tenaga Nasional Berhad (TNB) – Connection Charge, providing the current framework for High Voltage consumers, including the 1st Principle calculation, Project Cost, Present Value of Future Cash Flow, Connection Charge and RCC. https://www.tnb.com.my/connection-charge/
CLC and Electricity Tariff
- Tenaga Nasional Berhad (TNB) – Charges & Penalties – Connected Load Charge, setting out the current CLC framework, including the Reference Maximum Demand methodology, six-year application period, monthly calculation and prevailing CLC rate. https://www.tnb.com.my/commercial-industrial/charges-penalties/
- Tenaga Nasional Berhad (TNB) – Electricity Tariff Schedule, providing the tariff structure and charges used as the basis for the electricity-revenue assumptions in the analysis. The current tariff framework took effect on 1 July 2025 under RP4. https://www.mytnb.com.my/tariff/index.html?lang=en&v=1.1.70
Electricity Regulatory Framework
- Suruhanjaya Tenaga (ST) – Components of IBR, explaining the relationship between the Base Tariff, regulated electricity-supply costs and the Automatic Fuel Adjustment (AFA) mechanism under Malaysia’s Incentive-Based Regulation framework. https://www.st.gov.my/pricing/electricity-pricing-framework/components-ibr
Citation
Malaysia Data Centre Observatory (MDCO). A10.05 — Electricity Costs Behind Malaysia’s Data Centres – Net Present Value of Electricity Revenue of TNB. 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.