Business groups have called for a technology-neutral approach to powering data centres in Australia, pushing back against the Albanese government’s efforts to encourage greater investment in renewable energy within the sector. In a submission to a Senate inquiry, the Australian Chamber of Commerce and Industry (ACCI) supported the positions taken by Queensland and the Northern Territory, which stress that federal regulations on data centre developments should avoid privileging any particular energy source.
The ACCI emphasized the need for a measured and comprehensive strategy, warning against broad restrictions or moratoriums that could discourage investment and prompt operators to relocate offshore. The submission highlighted the complexity of factors influencing a data centre’s energy consumption profile, including its location, type, and operational tolerance for power interruptions. It argued that the diversity of energy mixes across Australian states and territories must be taken into account.
“Australia needs a data centre plan, not a data centre panic,” the submission stated. It advocated for source-neutral energy policies, suggesting that a varied energy portfolio ultimately benefits businesses and consumers through improved price stability and reliability — principles the ACCI said should extend to data centre planning.
The debate follows recent moves at the national cabinet level, where ministers endorsed proposed federal legislation designed to compel data centre developers to secure new energy generation capacity that fully offsets their power usage. Although the agreement indicated this generation should predominantly come from renewable sources, it allowed jurisdictions to utilize their existing state-owned coal or gas assets for offset purposes if doing so provided clear advantages in grid stability and affordability. Queensland and the Northern Territory, both of which maintain state-owned fossil fuel generators, have insisted that this flexibility preserves their ability to support data centres with nonrenewable power.
Federal government officials, however, have expressed skepticism about claims that integrating additional fossil fuel generation would necessarily reduce electricity costs. The laws, expected to be finalized early next year, will also mandate that technology companies implement measures to reduce power consumption during periods of grid stress and improve water efficiency.
Prime Minister Anthony Albanese indicated in a July speech that the government would intervene in the data centre sector through new regulations, responding to calls from unions for stronger oversight ahead of Labor’s national conference. While the business community broadly welcomed the announcement, the ACCI’s submission underscores ongoing concerns from corporate Australia regarding the potential impacts on investment.
In a related commentary, ACCI Chief Executive Andrew McKellar cautioned that regulatory and tax frameworks need to be improved to fully capitalize on artificial intelligence’s potential to enhance productivity. Following a Treasury report that downplayed AI’s immediate impact on Australia’s productivity, McKellar stressed that the country’s growth prospects over the next decade depend on establishing a supportive policy environment.