The Australian Government is currently getting advice on how it could force data centre owners to pay for the energy they use by funding the construction of renewable energy facilities.
Energy analyst Tristan Edis says it is achievable, and to a certain extent is already being done.
According to the Australian Energy Market Commission, one data centre can use as much power as five to 10 thousand homes, and a “hyperscale” data centre as much as a small city.
In the first three months of this year, 46.5 percent of the energy generated on the East Coast of Australia came from renewables.
Old coal-powered stations are closed or are slated for closure. At AGL’s Liddell power plant in the Hunter Valley, which was decommissioned in 2023, the two chimney stacks were demolished on Wednesday.
Due to these plants reaching retirement age, Australia is now racing against the clock to build the infrastructure required to fill the gap left by the shift away from fossil fuels.
At the same time, data centres are increasingly popping up adding to our energy demand. There are currently more than 250 data centres operating in Australia.
Edis, from research and advisory firm Green Energy Markets, said in the next several years data centres will be responsible for about 15 percent of Australia's total energy consumption.
Given this, the federal government, and all states and territories except Queensland, are currently getting advice on how they could force data centres to pay for the construction of new renewable energy generation to power their operations.
Edis said Amazon is an example of a company that has already signed contracts with renewable energy companies to supply the electricity that powers its data centres, saying it is "covering their full electricity consumption with purchases of renewable electricity".
Proponents of nuclear energy in Australia may argue that small modular reactors are needed to fill the energy gap that data centres are creating, despite the fact that nuclear energy is illegal in Australia and the Liberal Party failed to convince the public it was a good idea at the last election.
Edis is dismissive.
"Show me one that's built and operational, and for the ones that people are promising to build, please tell me how much it costs."
The most advanced example is the Darlington Nuclear Project in Ontario, Canada.
Made up of four reactors, the manufacturer initially said each reactor would cost $980 million. However the most recent estimate for building the first reactor is $6.1 billion.
Construction started in May 2025 and the first reactor is expected to come online in 2030.
Edis expects the project to be delayed despite the fact it’s being developed by an “incredibly enthusiastic government that's willing to accept nuclear power”.
He pointed to Victoria's Golden Plains wind farm as an example of a renewable energy project producing more energy than Canada's SMR at far less cost.
Stage one started construction in January 2023 and is already fully operational. Stage two started construction in June 2024 and is due to finish in mid-2027.
When the entire project is complete it is expected to cost $4 billion.