The Northern Territory and Queensland have opposed key elements of the federal government’s proposed framework for regulating the energy use of large-scale AI data centres, exposing an emerging divide over how Australia’s next generation of digital infrastructure should be powered.
At a meeting of the Energy and Climate Change Ministerial Council on 28 July, ministers agreed to progress a package of reforms aimed at ensuring the rapid growth of AI infrastructure does not increase costs for electricity consumers or place additional strain on the grid.
Queensland and the Northern Territory opposed several of the measures, including the Australian government’s proposed AI Standards, which set minimum requirements for energy, water and location, and the federal commitment to legislate nationally consistent standards requiring data centres to underwrite new renewable power supply. Queensland ultimately dissented from the meeting’s communique altogether.
Under the proposed framework, the federal government intends to require new large-scale data centres to underwrite additional renewable electricity generation while also ensuring consumers are not exposed to higher electricity costs. Ministers also agreed, with Queensland and the Northern Territory opposing, to progress regulatory arrangements that would require data centres in the National Electricity Market to offset their electricity demand by investing in new renewable generation located within the jurisdiction in which they are built, unless that jurisdiction opts out – for example, where it is too small to host its own renewable generation.
The differing positions highlight an emerging policy divergence over how Australia’s AI infrastructure should be powered.
The Northern Territory’s opposition comes as it promotes gas-backed AI infrastructure proposals, including Beetaloo Energy’s plans to develop a 2 GW AI data centre precinct fuelled by natural gas from the Beetaloo Basin. The proposal has been positioned as a way of supporting AI infrastructure while creating a long-term domestic market for gas produced from the basin.
While the federal government’s AI Standards remain under development, the differing policy approaches raise questions over how future gas-powered AI data centre developments, including proposals in the Northern Territory, would align with the proposed national framework if it proceeds in its current form.
W.Media has asked both the Northern Territory Government and the Commonwealth Department of Climate Change, Energy, the Environment and Water whether gas-powered AI data centre developments, such as Beetaloo Energy’s proposed project, would be compatible with the proposed national AI data centre framework. Responses had not been received at the time of publication.
The Energy and Climate Change Ministerial Council also agreed, with Queensland and the Northern Territory opposing, to develop National Electricity Rule change requests, for consideration in September, that would treat large data centres as market participants and require them to demonstrate they have secured new renewable generation, adequate firming capacity and demand flexibility.
The federal government also plans to strengthen reporting requirements for data centre energy use under the National Greenhouse and Energy Reporting scheme. Ministers also committed to supporting consideration of the AI Standards by National Cabinet in August, with detailed policy design to be undertaken in consultation with states, territories and market bodies.