Thailand Halts 49 AI Data Center Projects Over Water and Power Strain

Thailand's government has halted construction on 49 data centers, giving officials a month to draft new rules on power consumption, water use and fire safety. It's one of the first instances of a state directly stopping an investment wave driven by the AI boom, rather than simply monitoring its effects.

The government's decision

The suspension was announced by Danucha Pichayanan, secretary-general of the National Economic and Social Development Council, following the first meeting of a newly formed committee overseeing the data center sector. The committee is chaired by Finance Minister Ekniti Nitithanprapas. Officials say the industry's growth has outpaced the state's regulatory capacity and its power infrastructure.

The decision applies to projects still awaiting investment approval, not to facilities already operating. In the meantime, the government wants to unify rules that had until now been scattered across several bodies: the Board of Investment (BOI), telecom regulator NBTC, and local water authorities. Each had been issuing approvals independently, with no shared picture of how much water and power the entire industry actually needs at once.

Power grid under strain

The problem is fundamentally about infrastructure. Energy Minister Akanat Promphan warned that future electricity demand tied to data centers and AI could reach as much as 30,000 megawatts. Thailand's transmission grid wasn't designed for such concentrated, high loads, so the government has drawn up a 31 billion baht modernization plan.

The new electricity tariff for data centers, designated Type 9, is set at 5-6 baht per kilowatt-hour, noticeably more than the 3 baht households pay for their first 200 kWh a month. The idea is to make data center operators, not ordinary electricity customers, bear the cost of grid expansion through higher bills. On top of that comes a requirement to pay a deposit for guaranteed grid access of 4.5 million baht per megawatt, plus an obligation to begin commercial operations within 5-7 years or lose the allocated capacity.

Water and local conflicts

The second front in the dispute is water. Cooling systems at large data centers consume so much that the government fears competition with households and agriculture, especially in regions already prone to periodic drought. The new rules will require operators to submit water management plans, and authorities admit that some companies had signed parallel water-reservation agreements with several agencies at once, artificially inflating real demand and complicating resource planning.

Tensions are also visible at the city level. Bangkok Governor Chadchart Sittipunt froze approvals for three projects in the densely built Ramkhamhaeng and Rama IX districts, where plans called for storing as much as half a million liters of diesel for backup generators near a hospital and residential buildings. The Ministry of Energy has also suspended new fuel-storage permits, with confirmed violations carrying penalties of up to two years in prison and a 200,000 baht fine.

There are no new licenses for large projects right now - Chadchart Sittipunt, Governor of Bangkok

The scale of the investment boom

The scale of Thailand's boom explains why the government opted for such a drastic step. In 2025, the Board of Investment (BOI) approved projects worth a combined 1.876 trillion baht, of which 746 billion baht went to data centers alone, the largest share of any industry. In the first quarter of 2026, investment applications in the digital sector already reached 873.7 billion baht across 48 projects, a 2.4-fold increase year over year. Investors named include TikTok System Thailand, with a planned 842 billion baht expansion in the Bangkok, Samut Prakan and Chachoengsao area, as well as companies linked to the UAE's DAMAC Group and operators from Singapore and China.

That same week, Prime Minister Anutin Charnvirakul called for clearer regulations for the data center industry and greater emphasis on renewable energy to power new investments. The government is also considering redirecting some new projects outside the Eastern Economic Corridor toward Lampang province, where large water reservoirs left from the former Mae Moh mine could relieve pressure on more strained regions.

What it means for the global market

Thailand isn't an isolated case, but its move stands out for its scale and form. In the United States, local communities and state authorities have blocked or delayed tens of billions of dollars in data center investment this year, though those decisions were made mostly at the municipal and state level, not by the central government. In Thailand, it's the central administration, involving the finance minister and the head of the economic development council, that halted nearly fifty projects at once, signaling to investors that the AI boom doesn't exempt them from responsibility for local infrastructure.

For Polish companies and investors watching the global data center market, it's a signal that tensions between fast-growing demand for computing power and the limits of energy grids and water resources are no longer a theoretical risk. Similar questions about water, power and siting of data centers are coming up more often in Europe too, including in Poland, where plans for capacity expansions measured in hundreds of megawatts will likewise need clear regulatory rules before construction begins.

Thailand's new rules are expected to be announced within a month of September 4, 2026. Until then, all 49 projects awaiting approval will remain on hold, and the government says it will also audit already-operating facilities, checking water use, noise and cooling systems. The industry is entering a new phase, one in which the gigawatts being promised will have to match the grid's and resources' real capacity to support them.