Datacentres should be forced to invest in wind and solar energy, all states agree – except Queensland

State and federal energy ministers have reached broad agreement that datacentres in Australia should be required to fully offset their electricity consumption through investments in new renewable energy sources such as wind and solar, as well as energy storage. This consensus emerged during a recent ministerial council meeting focused on energy and climate change, with the goal of ensuring datacentres contribute positively to the energy grid rather than straining it. The ministers also proposed that datacentres provide demand flexibility services to better manage their electricity use and support grid stability. Queensland remains the sole holdout, with its energy minister emphasizing the need for further analysis on costs, benefits, and risks before endorsing national mandates. The push for renewable energy investment by datacentres comes amid growing concerns about their rapidly increasing power demands, driven in part by the expansion of artificial intelligence technologies. Datacentres currently consume about 2% of electricity in Australia’s main east coast market, with operational capacity expected to more than double from 1.4 gigawatts to 3.2 gigawatts by 2030. The Australian Energy Market Operator (AEMO) forecasts that electricity usage by datacentres will triple within the same timeframe, intensifying pressure on the energy system. Beyond electricity consumption, datacentres also raise concerns over water use for cooling, particularly in residential areas where opposition to new facilities is mounting. The federal energy minister, Chris Bowen, highlighted the importance of making datacentres an asset to the energy grid, reflecting a broader policy shift toward integrating large energy consumers into renewable energy frameworks. The Australian Energy Market Commission (AEMC) has been tasked with providing further advice on how best to implement these measures, with recommendations expected later this year. Queensland’s energy minister, David Janetzki, stressed the state’s focus on affordability and reliability, signaling caution about adopting national policies that could impact electricity prices without thorough evaluation. This development underscores the growing recognition of datacentres as significant energy users whose operations must align with Australia’s renewable energy transition and climate goals. The government’s earlier release of expectations for datacentres emphasized sustainable water use and support for national interests, reflecting a comprehensive approach to managing the sector’s environmental and social impacts as its footprint expands.