Australia Eases Renewable Energy Demand for AI Data Centres After Queensland Pushback

Anthony Albanese Seeks National Agreement on Data Centres

Anthony Albanese presented proposed national legislation for data centres1

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to National Cabinet on Wednesday, outlining conditions covering energy sources, water use, and locations for AI infrastructure. The legislation will also establish national standards for AI businesses regarding AI model training in relation to copyright protections, security, safety, and skills development2

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. Among the minimum obligations, data centres must not place upward pressure on energy prices and must make a positive contribution to Australia's energy transition1

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. The centres must use innovative solutions to minimize water use, meet infrastructure costs, and support transparent reporting on consumption1

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Queensland and Northern Territory Resist Renewable Energy Mandates

The Commonwealth and Queensland's Liberal and National Party government clashed over the federal government's initial insistence that new centres be tied to renewable energy projects1

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. Queensland Premier David Crisafulli firmly rejected federal Labor's push to force large data centres to use renewable electricity, arguing that his state government should choose how to supply electricity to data centres as it owns the whole power system3

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. The Northern Territory also opposed the initial plan, with both regions differing from the rest of the country in this respect4

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. Energy Minister Chris Bowen had said the federal government was "not going to let Queensland run a race to the bottom, which would see energy bills go up, reliability go down, because they want data centres at any cost"1

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Federal Government Backs Down on Strict Energy Requirements

Australia's government secured a broad agreement with regional leaders on developing new data centres, but appears to have set aside the demand that they be powered exclusively by renewable energy4

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. Albanese announced a deal on a national AI development plan, with new national legislation for data centres to be introduced early next year4

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. Canberra appears not to have forced the renewables demand after Queensland and Northern Territory opposed it4

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. Albanese told journalists that "all states aren't exactly the same, and that was accommodated in the way that we normally do, in a flexible way"4

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. The federal and state governments will now work together to develop consistent mandatory standards for data center energy, water and land-use, and support skills and training opportunities4

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Datacentre Power Usage Projected to Surge Seven-Fold

The Australian Energy Market Operator's latest forecast shows datacentre power usage is projected to increase seven-fold over the next decade2

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. The industry's rapid growth, driven by increasing reliance on AI and cloud computing, remained one of the most significant causes of growth in electricity demand2

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. In addition to 165 datacentres already operating around the country, a further 225 are in development2

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. Datacentre electricity demand was expected to grow from 5 to 34 terawatt hours by 2035-36, growing from 3% of overall consumption to 13%2

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. Climate Council chief executive Amanda McKenzie warned that "we've got one shot to get the rules right now and ensure that datacentre growth doesn't strain our grid and push up pollution"2

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AI Investments Drive Data Centre Boom in Australia

Australia is attracting significant AI investments due to its abundant land and strong renewable energy capabilities4

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. Companies invested almost 9 billion Australian dollars ($6.5 billion) on data centres and servers in the first three months of this year4

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. Queensland has earmarked land for a more than 700-hectare data center and tech hub run by a Singapore-based developer, estimated to cost more than AU$30 billion and tipped to be the largest of its kind in Australia4

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. Albanese emphasized that hosting large scale AI training data centres and unlocking frontier AI model training will help Australia capture a larger share of the economic value, technical capability and strategic influence of AI1

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. He stated that "it will advance our national sovereignty and is essential for our national security, business productivity, science, innovation and resilience"2

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