Australia's federal government plans to mandate large-scale data centres underwrite new renewable power supply will move ahead despite opposition from the state of Queensland and the Northern Territory (NT), following a key joint government forum.
The Energy and Climate Change Ministerial Council (ECMC), the national forum of Australian and New Zealand energy and climate ministers, agreed at a meeting on 28 July, despite objections from Queensland and the NT, to develop National Electricity Rule changes that would treat data centres as "market participants" in the National Electricity Market (NEM), Australia's main power grid.
Resistance from the two jurisdictions extended to a suite of regulatory options proposed by the Australian Energy Market Commission (AEMC), including mandates for data centres to offset their electricity demand by investing in renewable generation specifically within the jurisdiction where they are located.
"Queensland will always support proposals that deliver affordable, reliable and sustainable power, however, we will not support underdeveloped ideas that hand increased power to Canberra at the expense of Queenslanders," Queensland treasurer and energy minister Janetzki said on 29 July.
The NT government did not immediately respond to requests for comment on the reasons for its opposition. But the territory has positioned itself as a destination for energy-intensive data centre investment and has backed development of the Beetaloo Basin, where some proponents have proposed gas-fired generation to support future artificial intelligence (AI) and data centre projects.
Growing power demand
The ECMC agreed to progress action to ensure the AI economic opportunity takes place "in a way that is beneficial for Australia's energy grids and prevents additional costs on households," it said in a communique issued on 28 July.
The proposed changes would require data centre developers to demonstrate they can procure new renewable generation, provide adequate firming, and maintain demand flexibility.
The federal government also plans to introduce legislative amendments to strengthen reporting requirements under the National Greenhouse and Energy Reporting (NGER) scheme, to enhance transparency of data centre energy use.
The ECMC also welcomed, the federal government's announcement of new Commonwealth AI standards earlier this month, which will set minimum requirements for data centre investment concerning energy, water, and location.
A nationally consistent approach to regulating data centres is preferred, according to the ECMC, although this was also opposed by Queensland and the NT.
The Australian Energy Market Operator (Aemo) forecasts that data centre electricity use will reach 10pc of NEM demand by 2050. In New South Wales (NSW), the state's Net Zero Commission warned that rapid data centre growth poses a significant risk to 2030 climate goals, with annual demand in that state alone expected to add 8TWh by 2035.
Industry groups and climate advocates have proposed differing approaches to meeting the sector's growing electricity needs. The Clean Energy Council (CEC) recently argued that data centres should be allowed to use large-scale generation certificates(LGCs) as a temporary measure while investing in new renewable generation and firming capacity.
But the Climate Council has warned that LGCs are not a solution to rising data centre power demand, arguing that certificate purchases alone do not ensure sufficient new renewable capacity is built.
Potential for Beetaloo
While federal ministers push for renewable mandates, some developers are looking toward fossil fuels to power large-scale data centres. In the NT, shale gas developer Beetaloo Energy recently secured land for a proposed data centre powered by 2GW on-site gas-fired generation from the Beetaloo basin.
Australia's second-largest oil and gas firm, Santos, has also identified Beetaloo as a potential supply source for both domestic markets and LNG exports. The company is seeking for possible expansions of its 3.7mn t/yr Darwin LNG facilities and its 7.8mn t/yr Gladstone LNG operations in Queensland.
Inpex has also flagged Beetaloo gas as a potential feedstock source for future expansion of the 9.3mn t/yr Ichthys LNG facility near Darwin.
