Water demand set to rise with data centre capacity expansion

By the Editorial Team · Friday, October 9, 2026

Selangor’s ability to support increasing data centre investments hinges on expanding its water treatment capacity, with plans to add 2,360 million liters per day by 2031 to meet rising demand. Without timely completion of key projects like Labohan Dagang Phase 2, the state's water reserve margin will fall below the mandated safety threshold, limiting further industrial growth and new project approvals.

Selangor’s capacity to support ongoing growth in data centre investments will depend heavily on the timely expansion of water treatment facilities, as rising demand from both domestic and industrial sectors poses constraints on new project approvals in the coming years. According to BIMB Research, Air Selangor’s proposed development of four new water treatment plants (WTPs) aims to add 2,360 million litres per day (mld) by 2031, increasing the state’s treatment capacity by approximately 37% from the current 6,300 mld.

This expansion is seen as critical given the Selangor government’s projection that data centres will require about 632 mld of water. BIMB Research cautioned that without the commissioning of Labohan Dagang Phase 2—a planned 200 mld facility set to come online in 2029—annual organic water demand growth of roughly 3% will consume most available capacity within a year. Under these assumptions, the system could only accommodate an additional 60 mld of data centre demand between 2027 and 2029 while maintaining the industry’s recommended 15% reserve margin, which is just 10% of the anticipated total requirement.

The research house highlighted that the reserve margin—the buffer of surplus capacity above peak demand—has narrowed from 17.86% in 2025 to 16.23% as of August 2026, edging closer to the minimum threshold of 15% mandated by the National Water Services Commission. The completion of Rasau WTP Stage 1 in 2027, with a capacity of 700 mld, is expected to temporarily boost this margin back to around 18%. However, BIMB warned this improvement may be short-lived, as ongoing organic demand growth will likely absorb the added capacity over time.

Additional strain is evident at the Langat 2 treatment plant, which, despite having a design capacity of 1,130 mld, is currently operating at about 950 mld—approximately 84% utilization. These factors underscore the challenges facing Selangor’s water infrastructure amid expanding industrial use, particularly from the data centre sector, and the critical importance of advancing capacity upgrades to sustain future investment and development.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.