Billion-dollar tech companies are buying up land across Australia to build data centres, and they all need the same thing: a lot of power, drawn from the same grid as everyone else.
🫵Right now: Currently, data centres use about 2 percent of the electricity on Australia's east coast energy grid, similar to the yearly draw of more than 700,000 homes.
The energy market operator expects that demand to increase five times by 2050, according to its latest plan for Australia’s energy grid.
⚡ Why it matters for your bill: Renewable energy, backed by batteries and other storage, remains the cheapest way to build new electricity generation, reconfirmed this week in the CSIRO’s newest GenCost report.
The problem: Australia isn't building renewable generation fast enough to replace retiring coal plants, even before data centres are added to the equation.
That’s according to Dylan McConnell, a senior research associate at UNSW.
🗣️"Adding the data centre load on top of that makes that task even harder”, said McConnell.
📅 The announcement: On Wednesday, Prime Minister Albanese announced data centres will be legally required to underwrite new power generation, pay their full share of grid connection costs, and put at least as much energy back into the grid as they draw out.
It isn't law yet and won’t be until next year.
🔍 Clever wording? In a speech last month, Assistant Minister for Technology Andrew Charlton said the government expected data centres to "underwrite new renewable power supply".
The PM’s announcement on Wednesday split that commitment.
🗣️”We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply”, he said.
Later in the speech, Albanese went on to say:
🗣️ “To build new renewable generation – and firming – to strengthen our national energy resilience.”
The Prime Minister did not directly tie new power supply being built by data centres to renewable energy.
⚖️ The ministers' meeting: In May, every state and federal Energy Minister except Queensland agreed to get advice on making data centres pay for the power they use and for that power to be renewable.
That group of ministers is set to receive the advice later in July.
💵 What's at stake: Climate Council modelling found that without a renewable requirement on data centres, wholesale power prices could rise by up to 26 percent in NSW, 23 percent in Victoria, and 14 percent in Queensland by 2035.
Watch the National Account's Archie Milligan below: