Powering AI Growth: Google And TotalEnergies In Malaysia

The rapid growth of AI and its supporting digital infrastructure is placing substantial strain on the world’s power grids. This has led technology companies to take more direct control over their energy supply chains to ensure operational continuity.

A new 21-year agreement between TotalEnergies and Google is a case in point, showing how hyperscale operators are financing and securing dedicated renewable generation to meet the intense power demands of their facilities.

The agreement will involve TotalEnergies supplying one terawatt-hour of certified renewable electricity from the Citra Energies solar plant in Malaysia.

This power is designated to support Google's data centre operations in the region, underlining the scale of energy now needed and a strategic step toward vertical integration in power procurement.

Malaysia’s green energy framework

The Citra Energies solar facility is a project awarded to TotalEnergies, which holds a 49% stake and local partner MK Land, which holds 51%, by the Malaysian Energy Commission in August 2023. It is a component of Malaysia's Corporate Green Power Programme (CGPP).

This framework could be important for international corporations that are looking for renewable energy solutions in Southeast Asia.

The CGPP permits corporate consumers to enter into virtual Power Purchase Agreements directly with solar developers. This arrangement potentially circumvents some of the administrative hurdles associated with traditional grid connections.

For multinational technology firms, the structure satisfies a key requirement known as additionality, which ensures their investment contributes to creating new renewable capacity, not just redirecting what already exists.

Giorgio Fortunato, Head of Clean Energy & Power, Asia Pacific at Google, explains: "We're thrilled to build on our collaboration with TotalEnergies in Malaysia. This agreement is a key part of our strategy to make meaningful investments that benefit the economies where we operate. By enabling this new clean capacity, we are supporting local growth of the electricity system hosting our infrastructure."

Addressing supply chain bottlenecks

The energy supply chain stands as a primary constraint on the deployment of AI. The development of grid infrastructure is not keeping pace with the speed of digital expansion.

A hyperscale data centre can be built in 18 to 24 months, but new grid transmission projects often require five to ten years for completion, due to complex permitting processes and construction. This mismatch in timelines has created an urgent power supply challenge.

Research from Goldman Sachs in 2024 projects that data centre power demand could increase by 160% by 2030. This growth is caused largely by AI workloads that consume much more energy than traditional computing tasks.

According to the International Energy Agency's Electricity 2024 report, data centres, cryptocurrencies and AI together consumed around 460TWh globally in 2022. The agency expects this figure to potentially double by 2026.

These projections suggest that relying on municipal grid capacity may become an unviable strategy for maintaining continuous operations.

Strategic energy partnerships

The agreement between TotalEnergies and Google extends a previous collaboration, which included a Power Purchase Agreement announced in November to provide renewable power to Google's data centres in the US.

This ongoing partnership demonstrates how repeated collaborations between energy suppliers and technology firms can help streamline procurement.

Sophie Chevalier, Senior Vice President, Flexible Power & Integration at TotalEnergies, says: "We are delighted to strengthen our collaboration with Google through this agreement to supply renewable electricity to their new data centre in Malaysia.

"This PPA illustrates TotalEnergies' ability to offer competitive power solutions tailored to the needs of major tech groups, both in mature markets, such as the US and Europe and in emerging countries like Malaysia. It also contributes to achieving our target of 12% profitability in the power sector."

Malaysia has worked to position itself to attract data centre investment, particularly after Singapore’s 2019 pause on new facilities that was prompted by land and power constraints. This has led to overflow demand concentrated in the Johor and Kedah provinces.

The country's National Energy Transition Roadmap, which targets 70% renewable installed capacity by 2050, could transform national energy policy into a tool for attracting foreign direct investment in digital infrastructure.