December 27, 2025

Market overview (Global | 27 Dec 2025)

AI/HPC demand signals remain strong, with upstream electronics and server supply chains in expansion while policymakers and regulators sharpen scrutiny on data-centre externalities (water) and accelerate frameworks for corporate renewable procurement.

• Demand/supply-chain momentum:Taiwan industrial output surges on AI-driven electronics demand — November 2025 industrial production +16.42% YoY (21st consecutive month of growth), led by electronics/computers/optoelectronics output (notably servers and semiconductor equipment), while traditional industries (base metals/autos) declined.
• Enterprise AI adoption:India’s AI Shifts: From Pilots to Critical Infrastructure 2026 — enterprises are moving AI into production; founders expect 2026 to treat AI as “critical infrastructure,” with increased focus on AI FinOps, governance, and data-centre/GPU investments.

Risks and watchpoints

Near-term risks skew to permitting/regulatory friction and execution bottlenecks in power procurement; upside comes from new corporate procurement tools and build-out of renewables + storage.

• Water/wastewater permitting risk (US):Concerns about Ohio EPA’s data centers draft wastewater permit — Ohio EPA extended the public comment period to Jan. 16 while reviewing a draft general wastewater permit intended to fast-track approvals for new data centres. Concerns include draft language allowing a “lowering of water quality” and worries over anti-corrosive chemical discharges.
• Contracting complexity / basis risk (India):India notifies VPPA framework for corporate renewable compliance — the new VPPA structure introduces two-way financial settlement and shifts market risk/reward to the consumer, while physical supply remains with discoms/captive. This can improve bankability for renewables demand, but creates hedging/accounting and risk-management requirements for corporates.
• Execution risk in utility-scale solar + land:VCI Energy, DPS Energy to develop 250 MW solar — a proposed ~600-acre development indicates land and permitting coordination risk; timelines and financing were not detailed.
• Policy delivery risk (Malaysia):Analysts expect Malaysia’s energy transition momentum into 2026 — multi-program pipeline (auctions, FiT, storage) is supportive, but timing/implementation (including potential 2026 carbon tax) remains a key uncertainty.
• Heat reuse opportunity vs. delivery constraints:District heating unlocks waste heat, flexibility, and decarbonisation potential — significant theoretical potential for data-centre waste heat in Europe, but practical delivery depends on heat mapping, zoning, and targeted policy support.

Key deals and projects (DC-adjacent power)

Malaysia: 250 MW solar MoU targeting AI data centres

• VCI Energy, DPS Energy to develop 250 MW solar:
  • Parties: VCI Energy and DPS Energy (subsidiary of DPS Resources).
  • Scope: MoU to develop up to 250 MW utility-scale solar PV in Malacca, Malaysia.
  • Footprint: ~600 acres.
  • Output: target ~350–450 GWh/year.
  • Commercial angle: “BESS-ready” and intended to supply AI data centres, utilities and industrial customers via long-term PPAs.

Power, grid, and interconnection highlights

Malaysia: accelerating renewables + storage pipeline (NETR-linked)

• Analysts expect Malaysia’s energy transition momentum into 2026 highlights an expanding utility-scale pipeline relevant for data-centre power sourcing:
  • LSS5/LSS5+: 4 GW solar rollout.
  • Potential LSS6 auction: ~2 GW, with BESS requirements expected.
  • Proposed 300 MW FiT program for biogas/biomass/minihydro.
  • MyBEST storage program: 400 MW / 1,600 MWh grid-scale storage.
  • Policy/market signals: possible carbon tax in 2026; regional opportunities referenced via APG/LTMS PIP.

District heating as an efficiency lever for data centres (Europe focus)

• District heating unlocks waste heat, flexibility, and decarbonisation potential (IEA commentary):
  • Argues district heating can recover waste heat from multiple sources, including data centres, and provide system flexibility via thermal storage.
  • Quantifies potential: data centres could supply up to 300 TWh by 2030 in Europe.
  • Cites MW-level project examples in Stockholm, Espoo, Christchurch, Qingdao and Hamburg.
  • Recommends enabling actions: heat mapping, zoning, and targeted policy support.

Policy and regulation

India: VPPA framework notified for corporate renewable compliance

• India notifies VPPA framework for corporate renewable compliance:
  • Regulator: Central Electricity Regulatory Commission (CERC).
  • Instrument: VPPA framework enabling designated large consumers to enter non-tradable, non-transferable bilateral contracts with renewable generators.
  • Tenor: minimum 1 year.
  • Settlement:two-way financial settlement; generator can sell physical power on the exchange.
  • Risk allocation: transfers market risk/reward to the consumer; physical supply remains via discoms or captive generation.
  • Relevance: expands procurement toolkit for large-load customers (including data centres) seeking renewable compliance without direct physical wheeling in the contract structure described.

US (Ohio): draft general wastewater permit under review

• Concerns about Ohio EPA’s data centers draft wastewater permit:
  • Process update: public comment period extended to Jan. 16.
  • Intent: a draft general wastewater permit that would fast-track approvals for new data centres.
  • Issues raised: standard NPDES wording and language allowing a “lowering of water quality”; concerns about anti-corrosive chemical discharges.
  • Stakeholders: water advocates raised objections; Ohio Chamber of Commerce requested more time to evaluate.

What to watch

• Ohio EPA outcome and any revisions to the draft data-centre wastewater permit ahead of the Jan. 16 comment deadline.
• Early corporate uptake of India’s VPPA framework and how two-way settlement is treated in procurement and risk management.
• Progress from MoU to executed contracts (PPAs/financing) for the 250 MW Malacca solar project targeting AI data-centre loads.
• Malaysia’s expected LSS6 design details (especially BESS requirements) and the rollout cadence of MyBEST 400 MW / 1,600 MWh.
• Continued AI/HPC-driven hardware cycle strength indicated by Taiwan’s electronics output trend and implications for data-centre capacity planning.
• Policy traction on district heating measures (heat mapping/zoning) that could unlock data-centre heat reuse at scale in Europe.