Why the Albanese government is considering new investment mandates for tech giants
Australia’s fast-growing data center sector is trying to reframe its massive power requirements as an asset for the grid, arguing its deep corporate pockets could fund and accelerate the country’s multibillion-dollar energy transition rather than destabilize it.
Plans to build dozens of new data centers – buildings packed with server racks that store and transfer online data – are coming under intense scrutiny across Australia as MPs, climate groups and community campaigners raise alarm about the unprecedented pressure they will put on the electricity system.
Because data centers require large amounts of power for high-density computing and cooling systems, critics fear the rush to build more facilities will increase greenhouse gas emissions and leave households facing larger electricity bills to finance costly grid upgrades.
Australia is home to 162 operating data centers on the east coast, consuming approximately 2 percent of total electricity demand. The energy market operator says the sector’s demand could triple to 6 percent by 2030.
In response, the Albanian government is considering introducing strict new obligations, such as requiring data center owners to invest in new energy projects before their construction is allowed. As talks between government and industry continue, major operators are trying to change the way policymakers, and the broader energy industry, view their sector.
Sabooh Whitelaw, vice president of energy and utilities at AirTrunk, which has data centers in Melbourne and Sydney, says data centres, rather than being seen as passive conduits on the grid, should be seen as active “grid participants” that can bring in long-term demand signals and pour vital private capital into electricity generation, storage and infrastructure at a critical time.
“Growth needs to pay for growth,” he said. “Our goal is to help strengthen the grid, which means investing in infrastructure, partnerships and innovations that can support reliability, accelerate renewable integration and deliver benefits across the broader energy system.”
Whitelaw noted analysis by distribution network operators that suggested large, stable energy users could put downward pressure on network charges – the costs of building and maintaining power poles and cables, which can account for up to 40 percent of a typical electricity bill – by spreading costs over a larger volume of energy consumption. AirTrunk said it is already financing connectivity infrastructure, paying for network upgrades and signing long-term renewable contracts for its facilities.
Concerns about data centers’ power demand are echoing across the Asia-Pacific. Governments are increasingly responding to new requirements for reliability, flexibility and clean energy supply. Analysts at global research firm Wood Mackenzie say Australia is leading the way.
“Australia is among the first markets in the region to require large data centers to actively support grid stability,” he said.
Federal Energy Minister Chris Bowen said ministers from all states except Queensland had agreed that data centers should invest in additional renewable energy sources and tighten projects in their operating states to fully compensate for their energy demands, and would decide on new rules at a meeting in July.
“Data centers are one of the biggest drivers of new energy demand; we are moving to make them an asset to the energy grid, not a burden,” Bowen said. “If data centers want to benefit from Australia’s energy grid, we think they need to do their part to strengthen it – and it’s clear the overwhelming majority of states agree.”
Australia ranked second in the world for data center investment inflows in 2025, with Westpac analysis revealing the domestic pipeline is worth more than $155 billion. Microsoft has allocated $25 billion to Australian data centers and Amazon Web Services has also allocated $20 billion; this money was welcomed by the government at a time when growth was slow at a time when opposition from the community was growing.
Community campaigners and MPs have questioned how much benefit will come to consumers rather than global tech giants renting the buildings, and warned promises of cheaper bills and local jobs will need to be tested against pressure on water and energy.
Independent ACT senator David Pocock last week called for a tax on hyperscale data centres, drawing a direct parallel to an earlier push for a 25 per cent gas export tax, and warned Australia risks repeating the mistakes of the resource boom with its AI infrastructure.
AirTrunk, which offers more than 755 megawatts of capacity across Sydney and Melbourne campuses, is owned by a consortium led by US asset manager Blackstone and the Canada Pension Plan Investment Board, which acquired it in late 2024 for $24 billion.
Founder Robin Khuda, who predicted AirTrunk would become a $100 billion company, pressed the federal government for months to speed up planning and approvals, claiming Australia was at risk of wasting the boom.
Khuda, who this month announced a US$30 billion ($42 billion) data center investment in India, identified speed and power supply as factors determining where global tech money will go.
“Speed and precision are important when investing at this scale,” he said this month. “Investors need confidence that power, land, approvals and infrastructure can be aligned around long-term projects.”
He also warned that capital chasing AI infrastructure is mobile and will flow to whichever country moves faster. “Global capital has options,” Khuda said. “Naturally, it will gravitate towards jurisdictions that are open to investment, able to make quick decisions, and able to understand the strategic importance of digital infrastructure.”
The company has begun to point to projects where it says data centers could make a return to the system. While AirTrunk has announced plans to integrate a large-scale battery storage system at its SYD3 facility in Western Sydney, a 25-megawatt solar farm it is supporting with Google and European Energy Australia at Mulwala in the NSW Riverina is also about to start feeding the grid.
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