Thailand Halts 166 Data Center Projects in Bid to Balance AI Ambitions With Water and Power Limits

Thailand just slammed the brakes on its data center expansion. The government has paused construction on 49 projects already underway and frozen approvals for another 117. In total, 166 initiatives now sit in limbo while officials scramble to write rules that match the industry’s explosive growth with the country’s finite resources.

The move came after the first meeting of the national data center policy board on September 4, 2026. Finance Minister Ekniti Nitithanprapas led the session. Danucha Pichayanan, secretary-general of the National Economic and Social Development Council, delivered the key message at the subsequent press briefing. Officials admitted they lacked basic data on how many facilities operate, how much power and water they consume, or where they sit. That gap proved too wide to ignore.

Resource Strain Meets Surging Demand

Public unease had been building for months. Residents near proposed sites complained about noise from generators, diesel smells, and fears that giant cooling systems would drain local water supplies. In Bangkok, Governor Chadchart Sittipunt acted first. On September 2 he announced no new licenses for large data centers in the capital. Six applications had come in since 2021. Three smaller projects won approval years ago. The remaining three now face fresh scrutiny under updated safety, water and power standards.

Metropolitan Waterworks Authority deputy governor Supichete Thavorntaveevong offered numbers that surprised some critics. Larger data centers in the city use about 7,800 cubic metres of water per month. Hospitals consume roughly 20,000. Department stores burn through 30,000 to 40,000. “There has not been any impact on water services in Bangkok yet,” he said, according to Bangkok Post.

Yet the national picture looks different. Earlier reporting from Mongabay highlighted tensions in Chonburi province, where crab farmers live near construction sites for facilities reportedly tied to Google and TikTok servers. Local water authorities there already warn of worsening shortages that affect agriculture, homes and industry alike. Thailand faces the real prospect of nationwide drought this year. Data centers add another claimant on supplies already stretched thin.

Power questions loom larger still. The Board of Investment had approved 42 projects between 2024 and 2026 worth 750 billion baht and 3,400 MW of IT load. Preliminary applications for new capacity reportedly exceed 29,000 MW in some counts. Thailand’s reserve margin is forecast to shrink to just 1,800 MW by 2028. That figure sits dangerously close to what a handful of new hyperscale facilities could demand.

Energy officials moved on multiple fronts. The ministry halted new permits for backup diesel tanks after one Bangkok project reportedly sought storage for nearly 500,000 litres, far above the 200,000-litre limit. And in late August the government scrapped a 2,000 MW cap on direct clean-power purchase agreements that had applied mainly to data centers. The policy now opens to all industries. Energy Minister Ekanat Promphan framed the change as necessary to prevent higher costs from imported LNG from hitting households. “Fuel, and now electricity, is our breath of life,” he said at a forum covered by The Nation.

Prime Minister Anutin Charnvirakul, who also serves as interior minister, chaired the September 4 meeting. He called data centers vital infrastructure for the digital economy but stressed they must not burden public utilities or the environment. “We are not saying that we will never build data centers again. We need to put them in order,” Anutin told the committee, per Khaosod English.

The board created four subcommittees. They have one month to draft standards on economic benefits, water and electricity use including clean energy targets, site selection and safety, and environmental safeguards. New rules will likely classify facilities over 2 MW as industrial businesses, require resource utilization fees, and set minimum distances from homes and other buildings. Existing operators should get a transition period to comply.

Danucha made one point crystal clear. The government lacks legal power to force a construction stop. The pause amounts to a request for cooperation. Developers can technically continue. But few want to risk future permitting headaches or connection delays. Bloomberg first broke the national pause story on September 4. Bloomberg quoted Danucha directly: officials need time to develop regulations expected within a month.

TechRadar updated its coverage September 9 with details on the 166 total projects affected and the data gaps officials discovered. TechRadar noted the subcommittees must address everything from backup fuel storage to distance requirements from neighboring structures. Data Center Dynamics followed on September 7, stressing that town planning and environmental protection will feature heavily in the final framework. Data Center Dynamics.

Tom’s Hardware reported on September 8 that the pause is not enforceable yet carries political weight. Companies that push ahead may face retaliatory delays on grid connections or higher bank guarantees. The outlet cited revised industrial power rules from July that already demand 4.5 million baht per megawatt in guarantees. Tom’s Hardware.

MLQ News on September 9 added that the Board of Investment data shows the 42 approved projects represent substantial capital. It also confirmed the four subcommittee topics match those in official briefings. MLQ News.

The Nation offered the most granular count in its September 5 article: exactly 49 under construction, 117 awaiting permission, and 35 already operating. Only 11 of the operating sites came through the Board of Investment process. The rest slipped through fragmented oversight. The Nation.

So what happens next? The subcommittees must deliver within weeks. Their proposals will shape whether Thailand becomes a serious regional player in AI infrastructure or watches hyperscalers shift budgets to neighbors with clearer rules. Investors have poured in billions. AWS, Google, Microsoft and Alibaba Cloud already operate or expand here. The country set a target of 1 GW of data center capacity by 2027, up from 0.35 GW in 2024. That goal now collides with physical limits on water tables, power stations and community tolerance.

Officials insist the pause does not signal hostility to the sector. They want projects that deliver technology transfer, local jobs and genuine economic upside rather than simply consuming resources. Clean energy use will likely become mandatory for larger facilities. Closed-loop cooling systems may gain preference. Site selection rules could steer new builds away from dense urban areas and water-stressed provinces.

But the clock ticks. Reserve margins shrink. Drought risks rise. And global AI demand shows no sign of slowing. Thailand’s attempt to impose order on this frenzy will test whether rapid regulation can catch up to market momentum. The next month will reveal if the new framework attracts responsible investment or simply drives it elsewhere. One thing looks certain. The era of unregulated data center sprawl in Thailand has ended.