Higher costs, tighter rules: Johor’s water-guzzling data centres turn to Newater-like tech

JOHOR BAHRU - Faced with higher water tariffs and tighter regulations, data centres in Malaysia’s Johor state are turning to alternative water sources for intensive use in cooling systems.

Among these is wastewater reclamation, using technology such as reverse osmosis, similar to Singapore’s Newater technology.

Bridge Data Centres, DayOne, Computility Technology and AirTrunk are among the companies adopting such methods, with Bridge having built Johor’s first large-scale water reclamation plant and pipe network to cool the company’s upcoming 400MW data centre campus. The new centre, Bridge’s second in Johor, will be in Ulu Tiram, 15km from Johor Bahru, and is expected to begin operations by 2027.

The move to explore alternative water sources, according to Bridge’s chief executive officer Eric Fan, is also due to resource constraints at its first data centre site in Sedenak Tech Park in Kulai, 50km north-west of Johor Bahru.

He said the crowding of competitors has placed

a strain on the local water and energy supply

.

On Aug 11, federal and state sewage treatment operators Indah Water Konsortium (IWK) and Johor Special Water (JSW) signed three agreements to supply alternative water sources to Bridge, Singapore-headquartered DayOne and Computility Technology, a subsidiary of Beijing-based ZData Technologies.

Under the agreements, IWK will supply 12 million litres per day of treated sewage effluent to Bridge and Computility, while DayOne will treat raw water supplied by JSW from the Tebrau River for its second campus in Kempas, Johor Bahru.

Another player, AirTrunk, announced plans in April to use recycled water for its two Johor Bahru data centres.

In recent years, Johor has emerged as

a top data centre hub in South-east Asia,

raking in billions of ringgit in investments, in part due to a moratorium on data centres in Singapore between 2019 and 2022, which prompted the migration of such centres to elsewhere in South-east Asia.

But rapid growth in recent years has strained water and power supplies. In early 2021, Johor had just 10MW of data capacity. Currently, it has 47 planned and operational data centres with a planned capacity of 5.7GW, of which 487MW is already live, according to a July 2025 report by data centre market intelligence provider DC Byte.

Data centre capacity is measured by the megawatts of electricity the centres consume. A data centre with a capacity of 100MW uses about 1.1 million gallons (4.16 million litres) of water per day for cooling, according to experts – equivalent to the daily water usage for a city of 10,000 people.

In a bid to manage the high amounts of water consumed by data centres and to ensure the usage does not pressure the state’s water supply to local households, the Johor authorities have implemented measures such as a new tariff for the sector.

From August, data centre operators in Johor are charged RM5.33 (S$1.60) per cubic m of water by state water operator Ranhill – RM1 to RM1.75 more than the general non-domestic tariff they bore before. The federal government is mulling over similar moves in other states.

In 2024, the Johor state government also tightened measures in its data centre application processes. In April that year, it introduced a set of data centre guidelines where, among other things, operators are encouraged to explore renewable water and energy supplies.

In November 2024, a state official said it had rejected almost 30 per cent of data centre applications due to concerns over the lack of sustainable practices to reduce the use of water and power.

Opened in June 2025, Bridge’s water reclamation plant is a self-funded multimillion-dollar project. It was built in 10 months and will serve the company’s upcoming 20ha data centre site in Ulu Tiram.

Bridge’s first campus, MY06 in Sedenak, is a 600MW facility with 255MW ready for use by end-2025. The centre, which was launched in 2022, draws conventional non-domestic treated water for its cooling systems, the company told The Straits Times.

However, Bridge’s new plant will utilise the supply of sewage effluent from IWK’s sewage treatment plant located around 6.5km away, and use reverse osmosis technology, similar to Singapore’s Newater technology.

The plant currently processes five million litres of water daily, with plans to expand to 20 million litres depending on the demand of the data centre.

The plant uses water reclamation technology by Singapore-based membrane solutions provider Suntar International Group.

Treated sewage water from IWK is pumped into tanks in the Ulu Tiram facility to remove odour and other impurities, before going through three passes of reverse osmosis membranes contained in dozens of cylinders, turning the brown wastewater into crystal-clear pure grade water.

Mr Fan said the new Ulu Tiram sewage treatment plant fulfils the company’s need to both expand quickly and comply with local regulations to use alternative water sources. 

“We decided we need to develop a new region to serve our customers’ demands, that’s why we are moving out of Sedenak into a new region,” Mr Fan said.

Rising competition and rapid data centre development in Johor’s main tech park in Sedenak have also created water and power supply gridlocks and slowed expansion. This has pushed operators to look to other areas with more accessible resources, experts say.

Ms Vivian Wong, lead analyst at data centre market intelligence provider DC Byte, said it is natural for data centre players to look towards other regions that can provide the resources needed.

“In Johor, there is currently no available power capacity at Sedenak Tech Park, with its first phase fully sold and the next availability expected in the fourth quarter of 2026,” she said, noting that Bridge’s new campus will be the first data centre in Ulu Tiram, which will allow it to access resources quickly.

In response to queries from ST, Mr Lee Ting Han, vice-chairman of Johor’s data centre development coordination committee, said that works to expand the water and power supply in Sedenak are expected to be completed by 2027.

While experts welcome moves by data centre operators to use alternative sources of water for cooling, they also warned that the mushrooming of data centres in other parts of Johor may not solve the problem of resource scarcity.

Dr Mohd Fadhil Md Din from Universiti Teknologi Malaysia’s department of water and environmental engineering said that if data centre firms open in other regions of Johor to utilise resources elsewhere, it merely shifts rather than solves the strains on the water supply.

But the use of alternative sources of water, such as reclaimed water for data centres, is one step in the right direction, said Mr Charles Santiago, former chairman of Malaysia’s National Water Services Commission, known as Span.

“Any effort that uses alternative water must be welcomed. It signals that there is strong public and private commitment,” said Mr Santiago, adding that the industry should also explore the use of rainwater catchment and desalination for more sustainable water sources.