Data centre operators 'on board' with Australia’s energy rules after being grilled in parliamentary inquiry

Tech companies are backing strict energy consumption rules for data centres but the government must hold up its end of the bargain, a parliamentary committee has been told.

Artifical intelligence companies are fronting a federal grilling into the potentials and pitfalls of AI.

The hearings, which began with testimony from tech giants OpenAI and Anthropic, have pivoted to how to grease the wheels of AI’s full-throttle arrival into Australia.

Australia’s yet-to-be-legislated national AI standards, set to be drafted before the end of the year, will require newly built data centres to offset all of their electricity consumption with renewable energy investment.

The facilities’ operators said that was feasible, but needed careful management, adding one of the reasons Australia was so attractive to data centre developers was its potential abundance of renewable energy.

“We know the government’s new rules push us to 100 per cent (renewable power), everyone is on board with that,” Data Centres Australia chief executive Belinda Dennett told the committee on Thursday.

“What we have to do is get the mechanisms right to ensure those renewable energy projects can be built at the same pace as data centres can be built, because at the moment there’s a mismatch in timing.”

Australia was at risk of missing the train if it stayed the course, the MPs and senators heard.

“We need to speed up our renewable energy progress rather than slow down our data centre progress because if we slow down, that capital will move elsewhere,” Ms Dennett said.

Data centres are in a battle to solidify their social licence, with some states, including Victoria, cracking down on companies and no longer allowing them to build warehouses in residential areas.

In NSW, the Lane Cove community successfully campaigned against plans for a now-scrapped centre just 150 metres from a school. Other neighbourhoods are following suit.

The facilities are expected to account for 10 per cent of Australia’s electricity demand by 2050, up from about two per cent today.

But the companies insisted they had always pulled their weight and were not on the hunt for loopholes.

“There’s no free ride in there,” Ms Dennett said.

“We’ve always paid for our own energy use ... and there’s no tax incentives to build data centres in Australia.”

While Labor has copped criticism for being sluggish in legislating the standards announced by Prime Minister Anthony Albanese in July, the committee heard Australia was actually ahead of the curve on cushioning the electricity market against the AI boom’s demand.

The government could also use data centres as a tool to underwrite the renewable energy transition, the experts said.

That boost would include partnering with TAFE and providing training bases for electricians, particularly in regional areas where the centres are expected to crop up.

Politicians were also warned Australia faced a critical shortage of general processing units (GPUs) needed to provide the computational power used to train large language models like ChatGPT and Claude.

“South Korea have just bought 8500 (GPUs) for government ... Singapore only a few weeks ago opened their new centre with 1500 GPUs and we have 120, so we’re very far behind,” National Computational Infrastructure director Andrew Rohl said.

“That’s our advantage: the GPUs need to be next to the data.”

Australian data centre operator Firmus, in the midst of arranging an initial public offering, withdrew from its highly anticipated appearance at Thursday’s hearings at the eleventh hour.

The company’s submission to the inquiry suggested forcing AI firms to disclose details about their energy and water usage, as well as evaluate the good they were doing.