A niche growth opportunity

PETALING JAYA: The Malaysian Palm Oil Board’s (MPOB) Sawit EcoTherm – a palm-derived, non-conductive immersion-cooling fluid designed for high-density data centres (DC) – is strategically positive for the local palm oil industry, but not a near-term game changer for crude palm oil (CPO) demand and price, says Phillip Capital Research.

In a report, the research house said Sawit EcoTherm represents a “value-over-volume” opportunity, which involves converting palm oil into higher-value chemical and speciality-fluid applications rather than increasing bulk CPO consumption.

The technology converts palm-derived feedstock into a specialty dielectric fluid targeted at high-density computing, potentially allowing palm-derived products to participate in the expanding artificial intelligence (AI) and DC ecosystem.

Importantly, Sawit EcoTherm is not conventional edible palm oil, but a specialty formulated chemical fluid designed to meet the electrical, thermal, cleanliness and material-compatibility requirements of immersion cooling.

While the formulation is complete and ready for technology transfer, commercial-scale production and broader customer deployment remain subject to industrial partnerships and further DC validation.

“In our view, the potential value lies further downstream, spanning technology licensing, specialty-fluid manufacturing, system integration and DC-related services, rather than incremental CPO volume alone,” said the research house.

Based on a preliminary assessment from a recent visit to MPOB’s research and development unit, Phillip Capital Research said a 100 megawatt DC could require 0.8 to 1.5 million litres of cooling fluid, equivalent to 800 to 1,500 tonnes of fluid, assuming a density of about 1kg per litre.

On this basis, if the entire 4.6 gigawatt of Malaysia’s planned/under-construction DC capacity were eventually converted to palm-based immersion cooling, the implied initial CPO equivalent requirement would be 35,000 to 69,000 tonnes, or less than 0.4% of Malaysia’s annual CPO production.

Note that these figures represent initial system filling rather than annual consumption.

As the fluid is designed for closed-loop reuse, the actual recurring requirement would depend on the indicative fluid lifespan, replacement cycle and system operating conditions, the brokerage noted.

Therefore, Phillip Capital Research views Sawit EcoTherm primarily as a downstream value-creation story rather than an upstream volume story.

“It does not warrant changes to our near-term CPO assumptions or plantation earnings forecasts,” it added.