Our online lives are increasingly reliant on digital data, whether it\u2019s asking an AI chatbot a question, generating a video or transcribing an online meeting.<\/p>\n
Datacentres \u2013 giant warehouses stacked with servers to process and store all that data \u2013 have been around for decades. But what\u2019s changing is the rapid pace and scale of industry growth, fuelled by the uptake of artificial intelligence.<\/p>\n
Technology companies are pushing for Australia to become a hub for data processing and storage. But with 260 datacentres operating \u2013 mostly in Sydney and Melbourne \u2013 and dozens more in the offing, concerns about the impacts on power<\/a> and water<\/a> resources are also rising.<\/p>\n What has been said about datacentres \u2013 in the US and Australia \u2013 this week?<\/p>\n In the US, the president, Donald Trump, announced \u201cratepayer protection pledges\u201d requiring tech companies to meet their own power needs.<\/p>\n \u201cMany Americans are also concerned that energy demand from AI datacentres could unfairly drive up their electric utility bills,\u201d he said. \u201cThey can build their own power plants as part of their factory, so that no one\u2019s prices will go up.\u201d<\/p>\n In Australia, the energy minister, Chris Bowen, acknowledged \u201cdatacentres are big energy users\u201d, an issue he said would be addressed in a forthcoming AI and datacentre strategy.<\/p>\n \u201cPeople who are building datacentres do need to build new energy to go with it, and that energy will be renewable. But we also want to ensure that energy use has flexibility and redundancy built in.\u201d<\/p>\n A coalition of energy and environment groups, including the Clean Energy Council, Electrical Trades Union, Australian Conservation Foundation and Climate Energy Finance, proposed a set of \u201cpublic interest principles for datacentres\u201d that include investing in new renewable energy and using water responsibly.<\/p>\n Sign up: AU Breaking News email<\/a><\/p>\n \u201cIf you want to build a datacentre, you should have to build the renewables and water recycling to power it,\u201d the ACF chief executive, Adam Bandt, said. \u201cBig tech corporations should be forced to do their fair share so they don\u2019t drain our resources.\u201d<\/p>\n The Australian Energy Council says key policy questions still need answering<\/a>: will datacentres need to be 100% renewable? And will that be based on total demand, or take into account when the electricity is being used?<\/p>\n Meanwhile, an inquiry<\/a> in New South Wales will examine the social, environmental and economic effects of the datacentre boom.<\/p>\n Are datacentres a threat to Australia\u2019s electricity supply for households and businesses?<\/p>\n Datacentres currently draw about 2% of electricity from the national grid but that share could triple within five years, according to the Australian Energy Market Operator (Aemo).<\/p>\n By 2030, Aemo forecasts that datacentre energy demands could exceed the power used by the nation\u2019s fleet of electric vehicles. And by 2035, the industry could consume 21.4 terawatt hours of power, an amount just shy of the annual consumption of Australia\u2019s four aluminium smelters<\/a>.\u00a0<\/p>\n AGL, one of Australia\u2019s largest electricity companies, anticipates<\/a> demand might even \u201coutstrip AEMO\u2019s forecasts\u201d.\u00a0<\/p>\n The industry\u2019s energy and water demands are largely related to cooling \u2013 either by air conditioning or water \u2013 given servers, like other computing devices, convert electrical energy into heat.<\/p>\n The challenge of meeting these ballooning requirements is not unique to Australia. Globally, datacentre power demand is growing four times faster<\/a> than all other sectors, according to the International Energy Agency. Centres are multiplying and increasing in size, with hyperscale facilities becoming more common.<\/p>\n According to the IEA: \u201cA hyperscale, AI-focused datacentre can have a capacity of 100MW or more, consuming as much electricity annually as 100,000 households.\u201d<\/p>\n Will datacentre growth affect electricity prices?<\/p>\n There will be an undeniable impact on the overall cost of electricity, which will flow through to power prices, says Dr Dylan McConnell, an energy systems researcher at the University of NSW. \u201cYou need to build a bigger system to serve this load, and that will mean more expensive resources are used.\u201d<\/p>\n A report<\/a> by Baringa consultants for the Clean Energy Finance Corporation (CEFC) finds that by 2035 datacentre growth could increase wholesale electricity prices by 26% in NSW and 23% in Victoria, primarily driven by a need for more expensive gas peaking generation.<\/p>\n \u201cThis reliance not only drives up prices but could also lead to a 14% increase in grid emissions across the [national electricity market],\u201d the report says.\u00a0<\/p>\n The CEFC\u2019s head of infrastructure, Julia Hinwood, says Australia can \u201cavoid these pitfalls\u201d, by \u201cinvesting early in renewable energy and storage capacity to power the sector\u201d.<\/p>\n Industry group Data Centres Australia says power purchase agreements and onsite solar account for about 70% of the industry\u2019s energy consumption.\u00a0<\/p>\n The group\u2019s CEO, Belinda Dennett, says \u201cthe datacentre industry is one of the largest investors in renewable energy\u201d.<\/p>\n What about Australia\u2019s ability to cut emissions and meet climate targets?<\/p>\n But McConnell says while renewable energy is growing in Australia, the pace isn\u2019t yet fast enough to meet renewable energy and emissions targets. Datacentre growth could add to the challenge, he says.<\/p>\n \u201cIf we are in a situation where demand is growing much faster than anticipated and renewables don\u2019t keep up, then actually what we end up doing is just powering that new demand and not displacing coal.\u201d<\/p>\n