By Carly Wishart – AirTrunk Managing Director, Corporate and International
First published in the Australian Financial Review 12th May, 2026
Following Federal Energy Minister Chris Bowen’s meeting with his state counterparts to discuss how data centres can build Australia’s energy system, there’s a risk the debate heads in the wrong direction.
Too much of the national conversation still frames data centres as something the grid has to “cope with”, another source of rising electricity demand competing with households and industry. That misses the bigger opportunity.
Concerns around reliability, affordability and transmission are real. But treating data centres as the problem risks missing how coordinated planning can help fund and accelerate the infrastructure Australia already needs.
Done properly, data centres can help unlock the renewable energy investment Australia needs to modernise its grid, strengthen energy security and compete in the AI economy.
The question for governments is not whether data centres will grow. They will. Rather it’s whether Australia captures the investment, infrastructure and renewable build-out that comes with them, or whether it goes offshore.
Every economy is now competing for AI and cloud infrastructure. The countries moving fastest are not stopping demand; they are harnessing it.
Singapore is a useful example, even if its market structure and planning environment differ significantly from Australia’s. Despite tighter land and energy constraints than Australia, it linked new digital infrastructure to economic and lower-carbon energy goals.
The government set clear efficiency standards, tied approvals to sustainability outcomes and coordinated closely with energy providers and industry. Crucially, Singapore recognised digital infrastructure can accelerate investment in cleaner energy systems, not undermine them.
What Singapore has also understood is not all data centres are created equal. Hyperscale-backed infrastructure provide long-term investment certainty.
First, their intent and time horizons are what planners can rely on. More than 85% of Australian data centre energy applications are considered “phantom demand” and may never proceed.
By contrast, hyperscale-backed infrastructure is backed by long-term customer commitments, predictable growth and renewable energy agreements over decades. That’s important because renewable energy generators and networks will not invest billions in new renewable energy, storage and transmission infrastructure unless they believe demand is real, durable and capable of supporting long-term returns.
Second, certainty comes from the scale of demand. For every additional gigawatt of data centre demand, Australia will likely need around 3–4 gigawatts of new renewable generation capacity to support 24/7 operations.
Globally, hyperscalers drive close to 50 per cent of corporate renewable energy investment. That is not a reason to fear the sector, but to see it as a powerful catalyst for renewable investment.
The opportunity for Australia is ensuring more of that capital is deployed here to build wind, solar, storage and transmission infrastructure that benefits the broader economy.
Data centres currently account for only a small share of Australia’s total electricity use. Even as that grows, it reflects where modern economic value is being created: in digital services, AI, advanced computing and cloud infrastructure.
The modern economy runs on digital infrastructure, with the digital sector now delivering greater economic value per unit of electricity than mining or manufacturing.
Right now, Australia’s renewable energy approvals and connection processes remain fragmented, inconsistent and slow. Different states apply different rules, while energy and planning processes often operate separately. Projects can spend years navigating uncertainty before construction.
Following Friday’s discussions, federal and state governments are advocating broader offset obligations for data centres. However, those requirements must be implemented in tandem with reforms that accelerate renewable generation, storage, transmission and grid connection approvals.
Meanwhile, other countries are moving faster. That’s why the conversation following Friday’s ministerial discussions cannot become another “state versus state” debate. The real competition is Australia versus overseas markets moving more quickly to approve, connect and build the energy infrastructure.
And timing is critical.
Australia is replacing retiring coal generation while building a digital, AI-driven economy. Transmission, renewables and hyperscale data centres take years to deliver, and delays increase future supply pressures.
Australia needs a far more coordinated national approach bringing together governments, networks, energy providers and digital infrastructure operators.
We need a system that prioritises credible, financeable projects capable of supporting renewable investment, clearer coordination around transmission, renewable energy zones and grid access, and recognition that data centres can help enable the energy transition.
Industry also has responsibilities here. Data centre operators need to keep backing long-term renewable energy agreements, improving energy and water efficiency, and providing governments and communities with transparent forecasts of future electricity demand.
But governments also need to recognise the strategic opportunity in front of them.
The AI economy will require enormous amounts of infrastructure and energy investment. Countries that can align those two things effectively will attract capital, jobs and technological capability at scale.
Australia has many of the ingredients needed to lead: renewable resources, institutional capital, engineering capability and strong demand fundamentals.
What we need now is coordination and urgency.
Because if Australia gets this right, data centres will not just consume energy from the grid, they will help build the next version of it.
When it comes to renewable energy development, Australia is pushing through an open door in data centres, so use us!