Queensland and the Northern Territory have rejected the federal government’s plans to mandate that AI datacentres use renewable power, rubbishing Anthony Albanese’s proposals to regulate the booming technology as “underdeveloped ideas that hand increased power to Canberra”.
The latest federal-state stoush on energy comes as S&P Global, the economic rating agency, warns that power use from datacentres could rise five-fold by ۲۰۳۵ to ۱۰% of Australia’s total consumption, and that a mismatch between delivery timelines for datacentres and renewable projects could lead to energy bills skyrocketing.
But the federal Labor government says it will forge on with its plans to place energy and water usage rules on datacentres, and to develop “nationally consistent” regulations about AI – even if some states don’t agree.
The federal government is examining whether it can set price protections to shield Australians from any energy bill spikes related to the datacentre boom.
A meeting of state and federal energy ministers on Tuesday discussed the Albanese government’s expectations for datacentre development after the prime minister pledged to legislate binding standards for AI companies, including on locations and energy use.
Datacentres would be required to generate renewable energy, minimise water use and maximise energy efficiency. Albanese said there would be a “legal obligation” for new datacentres to underwrite new power supply, pay for their grid connection costs and “put at least as much energy into our grid as they take out of it”.
The Liberal-National government in Queensland raised concerns about a renewables mandate at an energy ministers’ meeting in May, the only holdout as all the other states agreed that datacentres should fully offset their energy demands with renewables, and transparently report their energy use and emissions.
On Tuesday the Liberal government in the NT joined Queensland in rejecting further proposals and agreements about datacentres.
All states – “with QLD and NT opposing”, according to a communique – backed the commonwealth’s plan for nationally consistent rules on datacentres, including underwriting new renewables and offsetting their power use, plus mandating that consumers face no price impacts.
“Queensland will always support proposals that deliver affordable, reliable and sustainable power, however, we will not support underdeveloped ideas that hand increased power to Canberra at the expense of Queenslanders,” said the state treasurer and energy minister, David Janetzki.
“We will continue to deliver affordable, reliable, and sustainable energy to deliver cost of living relief Queenslanders can rely on, while consulting with the community to support investment, jobs and economic growth.”
The NT minister, Gerard Maley, was contacted for comment.
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Federal government sources said Queensland and the NT’s opposition to the plan would not stymie Albanese’s roadmap, and insisted work to deliver nationally consistent rules would continue. The federal energy minister, Chris Bowen, will address the National Press Club next week, when he is expected to reveal more about the Albanese government’s plans before a national cabinet meeting in August and another energy ministers’ summit in September.
Federal powers relating to the Australian Energy Market Operator and Australian Energy Market Commission and surrounding connections of large facilities to power grids could be invoked to mandate that new datacentres use renewables.
This week’s Guardian Essential poll found Australians were reluctant to embrace new AI datacentres, with less than a third saying they would be happy to have a facility in their area; ۶۱% of people raised concerns about impact on energy demand and power prices, ۴۴% were worried about water supply and ۴۱% worried about environmental impacts and noise.
S&P, in a report released this week, noted Aemo’s estimates that datacentre energy use could rise to ۲۰ terawatt hours, or about ۱۰% of Australia’s total consumption, by ۲۰۳۴-۳۵. It also cited Sydney Water’s estimates that datacentres could use ۱۵% to ۲۰% of the city’s water by ۲۰۳۵.
The rating agency warned of an “infrastructure and temporal mismatch” which could lead to consumer prices rising.
“A big gap exists between data center delivery (۱۸-۲۴ months) and the delivery of transmission or renewable projects (three to five years),” it said. “Delays in transmission projects, such as those seen with Project Energy Connect in New South Wales (NSW) and Western Renewables Link in Victoria, could tighten supply and increase costs.
“If renewable and storage infrastructure fails to keep pace, the government’s Clean Energy Finance Corp. estimates wholesale prices could rise by ۲۵% across states, with emissions rising by ۱۴%.”
