Governments Pause Data Center Growth Over Resource Strain
Thailand, Indonesia, and New York State have implemented moratoriums or paused data center construction to address severe power and water shortages driven by AI demand.
Governments in Southeast Asia and the United States are halting or restricting data center construction as the artificial intelligence boom strains power grids and water supplies. In September 2026, the Government of Thailand paused 49 projects and delayed decisions on 117 others, introducing a new framework that includes higher electricity tariffs to cover the cost of imported gas.
Similar restrictions have emerged in Indonesia and Malaysia. The governor of West Java halted a project over missing permits, while the Government of Indonesia ordered developers in Batam to build desalination plants for cooling. In Malaysia, the government of Johor banned certain high-water-use facilities after data centers began consuming 24% of the state's power. These developments have sparked public unrest; residents in Batam and Johor have protested water shortages and environmental degradation. While Mayor Amsakar Achmad attributed water disruptions to drought and El Nino, Malaysian Human Resources Minister Ramanan Ramakrishnan argued that residents must have a say in large-scale projects.
This trend extends to the West, where New York State introduced a moratorium on environmental permits for large data centers in July 2026 to assess grid impact. This follows similar freezes in Ireland, Amsterdam, and Frankfurt. To bypass these bottlenecks, companies like Google have partnered with Kairos Power for small modular reactors. Meanwhile, the Government of China is shifting its capacity to resource-rich western regions through its Eastern Data, Western Computing program.
