in brief
- The government has announced it will prioritise data centre proposals that meet five expectations.
- While the expectations aren't law, they set out how the government will approach major data centre proposals.
The government will push data centres to use renewable energy and minimal amounts of water ahead of a surge in artificial intelligence companies coming to Australia.
Data centres use significant amounts of power and water, and the government anticipates that by 2030, data centres will consume about 6 per cent of grid-supplied energy.
The government announced on Sunday night it would preference development proposals for data centres that meet five expectations, including sustainable water and energy use.
Operators that further invest in worker training and supply affordable computing power to local startups and researchers will be prioritised under the newly announced principles.
Australia has the second-largest pipeline of data centre construction in the world, after the US, with investment booming globally to accommodate the computing needs of artificial intelligence.
What are the new expectations?
While the expectations aren't law, they set out how the government will approach major data centre proposals.
These five expectations are:
- Prioritise Australia’s national interest
- Support Australia’s energy transition
- Use water sustainably and responsibly
- Invest in Australian skills and jobs
- Strengthen research, innovation and local capability
"The Albanese government expects data centres and AI infrastructure operators to underwrite new renewable power supply, pay their full share of new grid connectivity so costs are not passed to consumers or businesses, and support Australia's energy transition through demand flexibility mechanisms," a government statement said.
The expectations follow pressure from interest groups to ensure new data centres are environmentally conscious and would boost local workforces.
Unions, environmental groups and clean energy industry bodies joined forces in February to demand an energy and water-self-sufficient sector committed to upskilling workers.
Energy has been a particular focus as the nation struggles to roll out renewable sources fast enough to meet climate goals and supply fledgling green export industries.
Data centres consume about 2 per cent of grid-supplied electricity, but that share is expected to triple by 2030 due to the AI surge.
In addition to bringing their own clean energy or storage to offset demand on the grid, operators will be expected to cover the full share of power connection costs and support network stability.
Energy Minister Chris Bowen said it was important to get the investment settings right to keep the electricity system secure and prices low.
"Data centres have great potential to support our grid and expand new renewable investment," he said.
Sustainable water use will also be viewed favourably to protect local drinking supplies, with recycled and non-potable water use encouraged where possible.
— With additional reporting by the Australian Associated Press.
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