KUALA LUMPUR: Deputy Prime Minister Datuk Seri Fadillah Yusof urged manufacturers and building owners to deploy artificial intelligence-enabled energy efficiency, demand response and storage solutions as Malaysia accelerates its push towards a low-carbon, digitally enabled economy.
He also urged them to share lessons learned so that aggregated demand can function as a reliable system resource.
Such measures, he emphasised, are critical to easing pressure on the national power grid while supporting the country’s long-term energy transition goals, as the fastest clean megawatt is the one that does not need to be built.
Speaking at the Global AI, Digital and Green Economy Summit 2025 today, Fadillah, who is also Energy Transition and Water Transformation Minister, said AI allows electricity demand to be optimised, peaks predicted and energy storage coordinated in real time, turning buildings, factories and electric vehicles into active contributors to grid stability rather than sources of strain.
“This is how demand becomes an asset, not a problem,” he said in his keynote address themed “Accelerating Sustainability Through Artificial Intelligence”.
The one-day summit brought together policymakers, business leaders, financiers and technology players to explore how AI can be harnessed to drive decarbonisation, strengthen energy systems and unlock green growth across the region.
Fadillah said Malaysia is entering a decisive decade where the energy transition, climate action and the rapid rise of AI are no longer separate conversations but converging realities. The key challenge, he stressed, is execution.
“If we are serious about building a low-carbon economy that is competitive, inclusive and resilient, we must modernise our power systems, digitalise our economies with trustworthy AI, and translate climate ambition into bankable, investable projects all at the same time,” he said.
Under the National Energy Transition Roadmap, Malaysia is targeting around 70% renewable energy capacity by 2050. Achieving this, however, will require a fundamental overhaul of the power system, from generation to transmission and distribution.
Grid modernisation, Fadillah said, is “non-negotiable”, pointing to multi-year investments by Tenaga Nasional Bhd (TNB) that incorporate AI-enabled planning, automation and battery energy storage.
He added that outcomes, including faster grid connections, fewer bottlenecks and greater resilience against extreme weather must match ambition.
“The grid must not only become larger, but smarter and more adaptive,” he said.
Beyond domestic upgrades, regional integration remains a key lever. Fadillah cited the Laos-Thailand-Malaysia-Singapore Power Integration Project as proof that cross-border trade in clean electricity can work at scale, adding that similar arrangements should be expanded across Asean Power Grid corridors.
Stronger interconnections, he noted, would lower system costs, smooth renewable variability and enhance energy security for participating countries.
Within Malaysia, Sarawak was highlighted as a model for early leadership, leveraging its hydropower resources while advancing hydrogen initiatives and attracting interest from partners such as Japan and South Korea.
“Early leadership de-risks new value chains for the entire nation,” Fadillah said.
He also addressed the rising energy footprint of digital infrastructure, particularly data centres, as AI adoption accelerates. While such facilities are critical to the digital economy, he said growth must be green by design.
Malaysia has issued guidelines to improve data centre sustainability, with tighter expectations on power usage effectiveness, renewable energy sourcing and waste-heat recovery. Projects that fail to meet stringent efficiency and clean-energy thresholds, he warned, will not receive support.
Turning to finance, Fadillah said capital will only flow when risks are priced correctly and integrity is assured. Malaysia’s voluntary carbon market, operated through Bursa Carbon Malaysia, has moved from concept to execution, with domestic nature-based credit auctions and updated market guidance already in place.
The government will continue strengthening the market to crowd in private finance for verifiable decarbonisation projects, alongside renewable energy certificates and regional alignment on standards and taxonomies.
At the same time, Fadillah cautioned against greenwashing, stressing that carbon credits, renewable certificates and “AI for good” initiatives must withstand independent scrutiny and full transparency.
Looking ahead, he said the government is aligning policy, regulation and procurement to ensure AI becomes an enabler of grid resilience, digital infrastructure grows sustainably, and decarbonisation projects reach financial close faster.
Utilities were urged to prioritise projects that reduce curtailment and harden systems against climate risks, while financiers were encouraged to properly price integrity, resilience and speed to impact.
“Malaysia’s direction is firm,” Fadillah said, adding that they are building a modern grid, a digital economy powered by trustworthy AI, and climate finance systems that deliver real-world decarbonisation.
The prize, he added, extends beyond emissions reduction to stronger energy security, new industries, better jobs and cleaner air, outcomes that will define whether technology truly serves as a catalyst for sustainable growth.
