Ex-Span chief questions data centre water source plan, warns of public costs

Former National Water Services Commission (Span) chairperson Charles Santiago has questioned whether the government adequately assessed data centres’ water needs before approving their development, as it mulls requiring operators to source their own water supplies.

Charles (above) said the proposal raised questions about how data centres would obtain water in practice, given that state water operators supply treated potable water.

He also questioned whether the water needs of facilities already operating or under construction had been adequately considered during project planning and approval.

"With many facilities already built or under construction, the proposal also raises questions about whether their water needs were adequately considered during project planning and approval.

"The deputy minister's concerns suggest that the entire data centre ecosystem has not been carefully designed, planned before implementation," the former Klang MP told Malaysiakini.

Charles was responding to Deputy Energy Transition and Water Transformation Minister Abdul Rahman Mohamad’s remarks in Parliament yesterday, in which he stated that Putrajaya may require data centres to manage their own water supplies to prevent disruptions to domestic and industrial consumers.

During the question and answer session, Rahman (above) said data centres’ water consumption remained a concern, particularly for facilities near water bodies that could affect supplies for other users

However, Charles said that requiring existing facilities to switch water sources could entail substantial retrofitting costs, as their buildings and cooling systems had already been designed.

"Without a clear transition plan, the proposal risks shifting the consequences of inadequate planning onto operators without necessarily improving water security," he lamented.

Reclaimed water prioritised

Charles said that Span had also introduced guidelines in September 2025 prioritising reclaimed water for cooling, where available, or air-cooled systems with zero discharge, and questioned whether the latest proposal would turn these recommendations into enforceable requirements, and how data centres would be expected to respond when alternative water sources were unavailable.

"Alternative sources are not interchangeable. Rainwater harvesting and stormwater capture could reduce reliance on treated potable water, but require adequate collection areas, storage capacity and appropriate treatment.

"Direct abstraction from rivers also presents risks, including competition with downstream users, disruption to river flows and impacts on aquatic ecosystems. Reservoirs and dams, meanwhile, form part of wider water-supply systems and cannot simply be treated as spare sources for industrial demand," Charles said, adding that the approaching El Niño also adds urgency to these questions.

Citing Span's report in August that nine dams were at warning level and one at critical level, he questioned whether data centres would have to reduce consumption, switch sources or comply with temporary allocation limits if water availability deteriorated.

"Who would decide which users receive priority? These questions need to be resolved before shortages occur, particularly when facilities may be difficult or costly to retrofit," he added.

Possible solutions

As a possible measure, Charles pointed to Singapore’s approach, under which large water users must appoint water efficiency managers and submit annual water-efficiency plans.

He proposed requiring Malaysian data centre operators to justify their projected consumption, report actual usage and undergo regular reviews of their water requirements.

"This would also help address phantom demand, where operators reserve more capacity than they ultimately use.

"The state should assess actual requirements against available supply and retain the authority to determine allocations, including adjusting them during droughts or other periods of water stress."

Ultimately, he said, Malaysia needed sustainable water sources, enforceable limits on freshwater withdrawals and safeguards to ensure that the costs of supporting the data centre industry were not transferred to households and the environment.

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