Data Centre Energy Mandate Hits Opposition from QLD, NT

The Australian government will require new AI data centres to put at least as much energy into the grid as they take out, under proposed mandatory standards. The plan has already hit opposition from Queensland and the Northern Territory, which refused to back national standards requiring facilities to pursue renewable power.

Energy ministers met Tuesday to discuss data centre energy use as part of the Energy and Climate Change Ministerial Council. The council, which does not require unanimity, agreed to proceed with ensuring a “significant pipeline” of data centre developments benefit the grid without adding costs to households. The federal government will legislate the new mandatory regulations early next year.

The opposition from QLD and NT sets the stage for a potentially fiery National Cabinet meeting in August, where Prime Minister Anthony Albanese will seek agreement from state and territory leaders. Ahead of that meeting, the political divide over how to power the data centre boom is sharpening.

Assistant Minister for Technology Andrew Charlton said the government was receiving more data centre applications than Australia could build, creating an opportunity to pick the best projects. “Better data centres are the ones that bring their own clean energy, that use water responsibly, that contribute positively to their community,” he told the ABC.

The Coalition argues the moratorium on nuclear power is deterring investment. Shadow Energy Minister Dan Tehan said the government’s proposed standards are too restrictive. “The problem is that the government has said that pretty much it’s wind and solar as the only two forms of renewable energy that data centres can use,” he said. He pointed to US companies such as Google and Amazon investing in nuclear power for data centres.

The International Energy Agency expects nuclear power’s role to grow from 2030, when more small modular reactors come online. Google signed a deal in 2024 with Kairos Power to buy energy from several SMRs for its AI infrastructure. The first of those reactors is expected online by 2030.

Nationals Deputy Leader Darren Chester, whose electorate of Gippsland in Victoria is seeing significant data centre investment, called removing the nuclear moratorium “a sensible thing to do.” Shadow Infrastructure Minister Andrew Hastie said it was not feasible for AI data centres to be powered solely off renewables.

Labor is emphatically opposed to lifting the ban. Energy Minister Chris Bowen recently told Sky News, “Nuclear is not an answer for Australia any time.” Instead, the government is pushing for 82% renewable electricity by 2030, backed by hydro storage and gas.

Tony Wood, a senior fellow at the Grattan Institute’s Energy and Climate Change Program, welcomed the new rules. He questioned how they would be enforced. “I’ve not seen anything that really expands on how such a requirement would be implemented,” he said. He called the Coalition’s nuclear push a “political sideshow.” “The only reason nuclear may come back on the agenda for Australia is if what we’re doing now turns out to be far too expensive and far too difficult,” he said.

Tony Irwin, a nuclear energy advocate and ANU honorary associate professor, believes nuclear should be used to power data centres. “Solar and wind obviously can play a part in it. Nuclear should also be playing a part because it’s reliable, it’s low emissions,” he said.

Edward Obbard, an associate professor in nuclear engineering at UNSW Sydney, said he found it “strange” that power sources were aligned with political parties. “I think nuclear technology needs to be assessed like-for-like with other technologies and applied where it’s useful,” he said.

The CEO of Data Centres Australia, Belinda Dennett, said operational data centres already offset 70% of their energy use with renewable energy projects. They rely on diesel for back-up power. “Diesel generators are installed as back-up power generation because critical infrastructure requires 24/7 availability,” she said. The National Health and Medical Research Council’s Centre for Safe Air has flagged diesel emissions from back-up generators as a significant unregulated source of harmful air pollution.

The Greens have called for a moratorium on data centre approvals until mandatory standards are implemented. Senator Sarah Hanson-Young said, “With more than 90 data centres already in the pipeline, we cannot allow a free-for-all in the meantime.”

Beyond the energy debate, the government sees attracting AI data centres as a way to build sovereign capability. The prime minister said in a speech that Australia’s land and sunshine were among reasons the world was “queuing up to invest.”