Labor to force data centres to wind down energy use at peak times

Energy-guzzling data centres will be forced to wind down power use at peak times to guard against blackouts or strain on the grid, Labor has insisted, as it says it must not spurn the advantage of the AI boom as the nation did with its abundant gas supply.

As attitudes towards AI harden in the US, where states are enacting construction moratoriums, Labor’s AI guru Andrew Charlton said Australia’s approach should be “neither boosterism nor alarmism”, as hundreds of millions of dollars of computing investment in NSW and Melbourne prop up Australia’s sluggish economy.

Charlton, assistant minister for science and technology, has announced a “triple-lock” set of obligations to make sure the hundreds of planned physical cloud storage hubs can sustainably fit into the energy grid, at a time when ageing fossil fuel plants and the push to renewables have stoked reliability fears.

In a speech to the Sydney Institute on Wednesday night, Charlton emphasised that tech giants such as Google, Microsoft and Amazon would be expected to “support the [power] system through demand flexibility, to be a grid asset rather than a grid burden.

“That means they must bring their own generation, not draw down everyone else’s. We expect them to pay their full share of grid connection, so those costs are never passed to households and businesses,” Charlton said, according to a copy of his speech provided to this masthead.

“New and clean supply, cover your network costs, and be demand flexible – the triple lock.”

Just as big energy users such as smelters are asked to cut energy use on some hot or cold days, Labor plans to tap the data facilities to power down if the grid is straining and air-conditioning units are running hard across the country.

Data centres took up 2 per cent – not a large proportion – of electricity in the east-coast grid in 2025. However, this is likely to triple by 2030 – roughly equal to the electricity needs of every home in Victoria – according to the Australian Energy Market Operator.

Another obligation Labor plans to impose on owners is that they build enough energy supply to power their operations. This means that in a scenario where a centre powers down when electricity demand is high, households will be able to tap into the privately funded energy flowing from the solar and wind farms that would normally supply the data centre.

At a meeting of federal and state energy ministers last month, Queensland’s conservative government pushed back on the notion of offsetting electricity demand by spending more on renewable energy and storage.

Energy Minis