Data centre power struggle: “Hold-out” states oppose federal push for BYO renewables

Large-scale data centres will be forced to invest in additional renewable energy to fuel their operations and avoid causing power price hikes in regulations agreed to by all but two states and territories. 

The Energy and Climate Change Ministerial Council revealed its plans late on Tuesday after meeting to discuss advice on the issue from the Australian Energy Market Commission. 

Climate groups welcomed the announcement and boost for renewable energy, but an organisation representing data centre operators warned the policy could be counterproductive if designed without their input.

The changes comes weeks after Prime Minister Anthony Albanese announced plans to require data centres to be powered by clean energy projects under a shake-up of artificial intelligence rules, and after a NSW data centre inquiry heard similar calls for action. 

The council, which includes energy ministers from the federal government and all state and territory governments, met virtually to discuss data centre energy proposals after flagging the issue in May. 

All ministers except those from Queensland and the Northern Territory agreed to pursue regulations that would “mandate that data centres offset their electricity demand by investing in additional renewable generation,” the meeting communique said.

Queensland also dissented from the communique.

Renewable energy would need to be generated near the data centre unless local authorities opted out of the requirement, and the rules would be set at a national level, although states and territories could add additional requirements. 

Changes to national rules would be considered in September, including reforms to the way data centres reported energy use.

The Climate Council called the proposed changes encouraging, although chief executive Amanda McKenzie said the rules should give data centre operators strict deadlines. 

Governments from all Australian states and territories should also support the changes, she said, to avoid penalising some consumers with rising power bills. 

“Unless these hold-out governments get on board, Queenslanders and Territorians will be left paying higher power bills, and we will all pay the price of higher climate pollution,” she said.

But introducing a blanket rule for data centres’ energy use could be ineffective if it was not designed with industry input, Data Centres Australia chief executive Belinda Dennett said. 

Each centre operated differently to meet customer demands and use renewable energy, she told attendees at the Australian Clean Energy Summit, and removing options could produce poor results or deter investments. 

“A one-size-fits-all approach will not work and may well be counterproductive to renewable energy investment objectives,” Ms Dennett said. 

“The risk of removing this flexibility and taking a one-size-fits-all approach to energy procurement and offset arrangements may have consequences for how the data centre sector approaches renewable energy, and it’s why good policy design matters and why industry needs to be at the table.”

Source: AAP