Bowen says data centres could get struggling wind projects over the line, as new report warns of “energy vampires”

Federal energy and climate minister Chris Bowen says the surge in interest in data centre development in Australia could be the key to ensuring the viability of wind projects that have been struggling to land power purchase agreements and have been left at the starting gate, despite government underwriting.

The federal government has selected 31 wind projects through tenders under its Capacity Investment Scheme to receive a form of underwriting scheme, including 10 announced just last weekend, but only three have so far reached financial close.

That’s mainly because of the shortage of corporate or utility buyers. But Bowen thinks that the surge in interest from data centres, and new government “principles” that they bring their own additional renewables to the grid could break the deadlock.

“A few weeks ago, I put those principles to state and territory ministers and got almost unanimous agreement that we would apply those principles, and those principles are that data centres should bring their own additional renewable energy,” Bowen told journalists on Tuesday.

“So they’ve got to bring new renewable energy to the grid, which is important and actually could be useful, for example, in helping some of the wind farms that are under development with PPAs, for example, to actually make those wind farms more viable and get them to a final investment decision.”

A few gigawatt-scale wind projects are likely to reach FiD in the next 6-8 months, including two that will be bigger than any other so far built in Australia.

They are the 1.4 gigawatt Bungaban project in Queensland which has a PPA lined up with Rio Tinto, the 1.45 GW Yanco Delta project in NSW that will sell back to its current owner Origin Energy, and the 1.1 Theodore project in Queensland that should line up a deal with state-owned generator Stanwell.

But the future is less certain for the others. In West Australia, the state owned Synergy has signed PPAs with four wind projects, and in South Australia Goyder North has a deal with BHP to help power its Olympic Dam mine.

AGL has signed deals with the Palmer wind project in South Australia and the Waddi wind project in W.A., and the revised state-owned SEC in Victoria is building the Delburn wind farm in Gippsland.

The underwriting agreements provided by the CIS are essentially designed to eliminate downside risk and make it easier for project developers to secure finance and agree competitive prices for offtake agreements. The energy hungry data centres are regarded as potentially deep pocketed buyers.

EDF Renewables, which has two wind projects selected in the latest tender – Banana Range in Queensland and Whyte Yarcowie in South Australia – specifically mentioned data centres .

EDF Australia’s 289 MW Whyte Yarcowie Wind Farm in South Australia and the 228 MW Banana Range Wind Farm in Queensland.

“The CIS is a critical milestone for our renewables projects, adding to their feasibility and stepping them along the path to becoming clean electricity generators,” it said. “With load growth across the country from data centres and electrification, Australia urgently needs new electricity generation like these projects.”

Almost every major transmission company is reporting a surge of interest from data centres seeking connection to the grid, particularly in South Australia where ElectraNet says grid double could double from the interest in corporate attracted to the state’s green grid, which will reach 100 per cent net renewables next year.

But wind farm owners aren’t the only ones with an eye on data centre demand. EnergyAustralia has virtually doubled the size of its proposed Marulan gas generator, now to be the country’s biggest, on the basis of data centre demand.

One company has proposed another big gas generator in the southern Highlands of NSW for the same reason, much to the horror of locals.

Finnish group Wärtsilä, currently building the country’s biggest battery at Eraring, has announced it is ramping up the global production of its fast-start engines by 65 per cent to meet surging demand, particularly for data centres.

However, a report written by Greenpeace Australia by independent energy analyst (and occasional Renew Economy contributor Ketan Joshi) is calling for a moratorium on new data centres until effective regulations governing their energy choices are put in place.

“Data centres are being rolled out at a feverish pace, with some of the largest planned for Australia consuming as much energy as Adelaide,” said Joe Rafalowicz, head of Climate and Energy at Greenpeace Australia Pacific.

“Australia is completely unprepared for the magnitude of impacts of the AI-driven data centre frenzy.The recent federal and state energy minister communique is a positive first step towards regulating the data centre industry, and managing its impact on the energy transition and the communities where they’re being built. 

“Without strong, legislated standards, we risk replicating the disastrous US pattern, where Big Tech corporations have carte blanche to drain energy and water, and build new, polluting gas and diesel-powered plants to fuel their operations.

“Greenpeace is calling for a moratorium on new data centre approvals and construction until we have clearly defined, enforceable regulations and standards in place to govern this industry — essential if we hope to avoid the alarming outcomes outlined in this report.”

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