Australia should embrace the data-centre boom, but not at any climate cost. Artificial intelligence and cloud computing will drive enormous investment over the next two decades and Australia has obvious advantages. Better that we develop them properly than reproduce the regulatory failures emerging elsewhere.
That is the logic behind the approach supported by the Commonwealth and most states and territories at the Energy and Climate Change Ministerial Council in July. Large data centres would be required to underwrite additional renewable generation, provide adequate firming and demand flexibility, and bear the costs attributable to their connection.
Data centres are not ordinary electricity users. Their demand is vast, concentrated and continuous. AEMO forecasts data-centre consumption in the NEM could reach about 34 TWh by 2050, around 12 per cent of forecast grid-supplied electricity. Large data centres will become NEM market participants, effectively small and medium-sized power stations.
The climate consequence is obvious. New demand of that scale cannot cannibalise existing clean generation while the rest of the economy is required to decarbonise. It must bring new low-emissions supply with it.
