The Insider/
AI Infrastructure Policy: What it means for industry
The Australian Government has been showing just how fast it can move when a surprisingly motivated PM gets behind a project. On 17 September, the Department of the Prime Minister and Cabinet released Getting it right: building AI infrastructure that works for Australia, which is the detail behind what National Cabinet only agreed on a fortnight prior, with legislation due early next year.
In case you missed it, we’ve already done a deep-dive on the data centre opportunity for WA and how renewables can work to power AI in this State.
What is being asked of the industry
As agreed at National Cabinet, large data centres will be expected to bring forward the renewable generation they consume rather than drawing on fossil fuels, and to carry their own transmission and network costs so households are not wearing the increase. There are firm guidelines about limiting water usage, guidance on how to engage properly with the communities and councils they land in, and an expectation to put something back into skills and training. For anyone running frontier AI training there are also conditions attached on security, local research and copyright.
Meanwhile, we’ve seen the Premier of SA launch a royal commission on AI following a US tour to meet Apple, Anthropic and OpenAI. And this week Prime Minister Anthony Albanese met with the UN to call for global guiderails to prevent ‘runaway AI’.
It shows deliberate intent to attract the flood of capital being spent on data centres to deliver jobs, renewables, community investment, and sovereign capability, while protecting Australians from the imagined consequences of AI gone rogue.
What is at stake
Modelling commissioned by Data Centres Australia has around $42 billion of investment going into new capacity by 2030, more than doubling what is operating today and lifting ongoing jobs in the sector from about 9500 to 23,000.
The electricity demand from these facilities is expected to completely reshape the system. AEMO has forecast data centres going from roughly 3 per cent of demand in the national electricity market to 13 per cent by the mid 2030s.
The load is unlike anything else on the system. It runs close to flat around the clock, it cannot be shifted or shed at short notice, and it is arriving just as coal comes out of the market.
Why government is moving
Higher power bills and water shortages are clearly politically sensitive, and we have learned from the overseas experience that communities will overwhelmingly reject data centres that create cost of living impacts.
The requirement to bring forward new generation and carry their own network costs is there so households are not paying more for power. Water carries the same logic, with efficiency standards, public reporting and a hierarchy that puts recycled ahead of potable, so drinking water usage is minimised.
The reality is that the big AI players want data centres in the next twelve months – not three years. Our energy networks are already under strain and without an incredible acceleration in transmission and generation capacity – these data centres could go elsewhere.
This is addressed somewhat by allowing the renewable obligation to be phased in rather than starting at full strength, allowing energy from coal and gas plants (in limited circumstances), and carving out smaller facilities from proposed regulation.
The ReGen view
Most of this lines up with what we argued here in July, that projects get built when there is a creditworthy buyer underwriting new generation, that firming has a place while the renewables catch up, that public money belongs in transmission rather than generation, and that host communities need to see the benefit.
The investment and jobs numbers will do a lot of work over the next few months, since every one of them doubles as an argument to encourage as much investment as practical, and government will be weighing them against AEMO’s more cautious view on delivery.
Proponents will end up running energy, water, community and approvals as one compliance position rather than four separate workstreams. That is the thinking behind Approvals Accelerator, our joint practice with Tactica Advisory.
If you want to talk through what that means for a project, let’s chat.