Developer of Australia’s biggest renewable projects says it can offer super cheap power deals for data centres

The developer of Australia’s two biggest renewable energy projects says it will be to offer super-cheap power deals for data centres at less than $US50/MWh – less than half the price of competing offers and four times less than gas.

Intercontinental Energy is the developer of two mega-scale wind and solar projects – the 26 gigawatt (GW) Australian Renewable Energy Hub in Western Australia’s Pilbara, and the even bigger 70 GW Western Green Energy Hub in the south-east of the state.

The development of both projects depends almost entirely on the success of its green hydrogen plans – for green iron and ammonia – but Intercontinental CEO Alex Tancock sees an interesting side hustle in powering potentially multiple gigawatts of data centre capacity.

“We’re looking at a cost below $US48 a megawatt hour ($A66/MWh) … to supply a tier four data centre,” Tancock told Renew Economy in an interview this week. That, he says, is half the price offered by on-grid firmed renewable projects, and one quarter of the price paid by data centres for gas-based power in places like Singapore.

Intercontinental says the plans revolve around the creation of 2 gigawatt nodes – he compares them to Lego blocks – that combine around 1 GW of wind and 1 GW of solar. These will feed power directly to the data centres and also to the hydrogen electrolysers that create the feedstock for the node’s major customers.

Wind and solar both have strong profiles in the Pilbara, but the key to the lower costs for the data centres is the absence of system costs, high voltage transmission, and battery storage. The idea is to use the hydrogen production, which is happening anyway, to deal with variable production.

“We’re not making hydrogen to store energy, we’re making hydrogen because that is what the main customer wants (for green iron or ammonia),” Tancock says.

“What it allows us to do is to use a little bit of that hydrogen to top up when the renewables is a bit quiet, a windless night, for instance, which happens rarely. That makes for very very low cost storage.”

Another key part of the plan is to build the data centre within the confines of the massive wind and solar arrays. That avoids the need for big transmission – it will use 66 kW lines from the wind to the hydrogen production facility.

It also allows the data centre to tap into the built-in cooling systems of the node. That’s important because cooling can amount to one third of energy needs.

Tancock says the patented P2(H₂)Node  nodes designed by his Perth-based team – and which recently received federal government funding for further development – would suit a data centre with around 200 MW of demand in each node.

This, by coincidence, is the same size that Andrew Forrest’s Fortescue is offering as a sub-set of the massive green grid he is building to get his iron ore mines to “real zero” by 2030.

See: “Cheaper and faster:” Fortescue to create a $1 billion green grid to power data centres

It’s important, Tancock says, not to oversize the data centre component in each node. But, to give an indication of the scale of his ambitions, Intercontinental sees the potential for 47 such nodes over the AREA and WGEH projects, which could be built out over the next 20 years.

That, he says, provides a clear pathway for major data centre developers as they expand their capacity and want to lock in low power costs. He sees up to 2.4 GW of data centre capacity in his Pilbara plans, and potentially 12.5 GW if both projects are built to their planned capacity.

“Each time you add a Lego block, you’re increasing the energy storage free of charge, because the pipelines that connect all those Lego blocks act as your batteries,” Tancock says.

“So the difficult one is the first Lego block. Once you’ve built the first, the cheapest Lego block on the planet is the next lego block.

“If you think of how Australia has developed its LNG resources or its idol resources, right, they were very difficult to get off the ground.

“But once you did the first one, it was it was very easy to scale the industry, and that’s exactly the approach we’ve taken.

“So rather than doing lots of small, bespoke projects scattered around Australia. We’re taking the inspiration from LNG in the Northwest shelf and iron ore in the Pilbara, looking at what succeeded, and replicating that model.”

So, what could possibly go wrong? Intercontinental has deep pocketed backers, including the Singapore GIF, but says the first project will need government support – just as every industry before it did.

And the Western Green Energy Hub still needs to negotiate complex environmental approvals, particularly with a fierce campaign mounted by the likes of the Bob Brown Foundation concerned about the underground kasts.

Tancock says talk of Australia becoming a renewable superpower that exports to the world has centred on either electrons (via cables), or molecules (via e-fuels, hydrogen and its variants).

“But here’s the third arrow to the quiver, if you like, which is now data that we can provide as a compute service to billions of customers in Asia,” he says.

“We are already pleased to see early engagement from suppliers and data centre companies who recognise the potential of this model.”

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