Australia Tries To Manage Data Center Tensions: ‘that Means Bringing Your Own Energy’

Hyperscalers like Anthropic want to go big in the land down under, and the Australian government is keen to attract the investment. But those energy-guzzling data centers are going head-to-head with the country’s efforts to expand renewable energy.

“Sometimes a data center is quicker to build than a wind farm,” Climate and Energy Minister Chris Bowen told POLITICO’s Energy podcast. “So we need to work together … on the pipeline and ensure that the developments continue in our national interest.”

Bowen is playing a critical role in the U.N. climate talks beginning Monday in Antalya, Turkey, amid soaring energy demand from data centers, growing cooling needs and industrial processes. He says his government welcomes data center investment, as long as it doesn’t send energy bills skyrocketing.

“That means bringing your own energy, and it means bringing your own cheapest form of energy, which is renewable energy,” Bowen said.

Australia is preparing draft legislation to manage surging energy demand from the growing crop of data centers. But Bowen said natural gas would still be needed.

“Our approach is that gas can play a role in peaking and firming,” he said. “It might not even be needed every day. It might only be needed a couple of days a year, and factoring that into the system is very sensible to have that backup option.”

Australia has been investing in the transition to clean energy, Bowen noted, and it is now the third-largest market for utility-scale batteries behind China and the U.S. He said the country is using less gas as a result.

“They're storing renewable energy from the middle of the day and putting it to use at night, and so that means the gas-fired power stations aren't being turned on as much,” he said, adding that there could be “a similar approach to data centers in the future.”

One challenge he’ll face is managing the pipeline of projects to ensure renewable energy, and the infrastructure to support it, are being built at the same pace or faster than data centers.

Australia is already home to more than 160 operational data centers, and at least 225 projects are being proposed, according to the country’s energy market operator. Anthropic recently signed its first Australian deal, as part of a $32 billion data center in Queensland. The Australian Broadcasting Corporation reported that the facility could consume enough power for 1.5 million homes.

Grid constraints in the U.S. have led many data center developers to turn to behind-the-meter gas turbines so they can skip lengthy connection queues. That’s threatening to drive up planet-warming pollution in a country where President Donald Trump has led a sweeping attack on climate policy and removed the U.S. from the world’s global climate treaties.

As data centers proliferate around the world, countries are grappling with a backlash from communities that are worried about the energy and environmental costs of the facilities.

U.S. elections last week served as a referendum on data center expansion by sweeping a host of officials into office who vowed to curb that growth. Those pledges have also sparked fears that a data center slow down could hurt the U.S. economy.

Australia is facing its own hurdles from lawmakers who worry that rapid data center development is straining energy and water use and diverting labor from other industries.

Other countries are taking a cautious approach. Ireland and Spain are requiring data center operators to ensure a certain percentage of their power comes from clean energy — with Ireland even asking them to pay to build it. Singapore has passed legislation that would penalize companies for violating its clean energy commitments.

Australia is attempting to move in that direction. It’s seeking public feedback on ideas that would require data center operators to invest in renewable electricity supply, report water use and manage demand during peak times.

It’s a debate that is certain to make its way into the climate talks starting this week in Turkey, where Bowen will preside over the formal negotiations.

Data centers’ voracious appetite for energy is not on the agenda for those talks — where more than 190 countries need to find consensus on a range of issues meant to protect the world from runaway climate change.

He doesn’t see that as a problem.

“It will be one of the things that ministers want to talk about,” said Bowen. “But I don't think it changes the fundamental dynamics that we need to get more renewable energy up … and we need to electrify those things that can be electrified.”