Massive growth in data centre energy consumption threatens to push up prices, AGL chief Damien Nicks warns
Voracious power demand from data centres could drive prices higher if they don’t actively support investment in new generation, the boss of energy giant AGL warns.
Voracious power demand from data centres could drive prices higher if they don’t actively support investment in new generation, the boss of energy giant AGL warns.
Chief executive and managing director Damien Nicks noted projections varied wildly, but the growth seen on Australia’s east coast was already remarkable.
“We’re seeing data centre volume really starting to pick up, so that’s real,” Mr Nicks told The Nightly on Wednesday.
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By continuing you agree to our Terms and Privacy Policy.“The scale of it is hard to know: the Australian Energy Market Operator has forecast 100 per cent . . . will it be 50 per cent?
“It doesn’t matter, it’s still huge growth. As demand rises, it has the potential to put pressure on pricing.
“We need to get more assets built in the marketplace. We want to make sure that if data centres are signing up, coming into the system, we want to them to sign up to longer-term energy contracts.
“It then allows us to go and build long-term assets. That then means they’re also investing into the future, and it’s not just all sitting with (the) customer.”
The concern about data centres’ epic consumption putting strain on the grid, and thus other consumers, comes as the growing amount of cheaper renewable energy promises to actually ease prices.
Federal Energy Minister Chris Bowen has been formulating a data centre strategy and recently said they need to “bring new renewable energy to the grid” with strong power purchase agreements, be ideally be built near generation and pay for their own connection.
Mr Nicks also expressed concern about a lack of detail on the Albanese Government’s contentious gas reservation policy, which was confirmed after fierce debate over taxing the upstream sector more heavily and will apply from mid-2027.
“We’ve been supportive of prospective forward-looking reservation for new assets,” he said.
“I think it was the right decision for this country.
“In saying that . . . what you want to do is get the right reservation policy to still encourage investment ... but be clear about how it works and what the detail of it is.”
AGL shut down its last gas well in 2023, the same year it shut down the coal-fired Liddell power station, also in NSW, in a shift from traditional power generation to renewables.
