Major data centres across Australia will soon need to turn to renewable energy sources to power their operations as a way to prevent escalating electricity costs, under new regulations approved by every state and territory except two.
The move was announced late Tuesday by the Energy and Climate Change Ministerial Council. After a comprehensive meeting, they unveiled their strategy, shaped by recommendations from the Australian Energy Market Commission.
Environmental groups have hailed this initiative as a positive step towards bolstering renewable energy usage. However, representatives from the data centre sector expressed caution, warning that implementing the policy without their involvement might lead to unintended consequences.
This policy shift comes in the wake of Prime Minister Anthony Albanese’s recent initiative mandating that data centres rely on clean energy projects. This change is part of a broader overhaul of artificial intelligence regulations, following similar advocacy during an inquiry into New South Wales’ data centres.
Energy ministers from the federal, state, and territory governments gathered virtually to deliberate on these energy proposals for data centres, having noted the significance of the issue since 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.
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,” 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.”