Both the Australian and New Zealand data centre markets offer operators the chance to make renewables an integral part of their energy mix but the question some are asking now is how to move beyond incorporating green energy into the mix and move on to become an energy market participant supplying the grid.
According to the experts at Watt Clarity [1] managing both energy and emissions goals for a data centre in Australia and its clients is going to become far more complex. In Australia, the National Electricity Market (NEM) likes data centres because they usually have a very flat load, so it is easier to hedge and offer competitive energy prices and they have the ability to tap into uninterruptible power supply and back-up generation to participate in the market.
Data centres are substantial energy consumers, with projections indicating they could account for up to 8% of Australia’s electricity demand by 2030. As of early 2025, renewable energy constitutes in the region of 40% of the National Electricity Market, with ambitions to increase this share substantially in the coming years.
According to Watt Clarity’s Warwick Forster, if data centre operators decide to enter the energy market instead of just passing on energy costs to users, they may then sell different energy products to their customers as part of their data services, if they have a licence to do so.
Time-stamping
Watt Clarity highlights how data centre operators can actively contribute to the renewable energy transition. Australia’s Renewable Energy Target (RET), established in 2001 and running until 2030, allows eligible renewable generators – such as wind, solar, and new hydro – to create Renewable Energy Certificates (RECs) for each megawatt-hour (MWh) of renewable electricity produced. The RET mandates that electricity retailers and most large energy users acquire RECs equivalent to approximately 20% of their annual electricity consumption, with the option to voluntarily surrender additional certificates to support higher renewable energy usage.
Post-2030, the RET is expected to transition into a Renewable Energy Guarantee of Origin (REGO) scheme, which aims to support entities wishing to surrender RECs to meet sustainability objectives. Proposed changes under the REGO scheme may include time-stamping of RECs by half-hour and day to enable businesses to match their energy consumption with renewable generation more precisely.
Time-stamping is particularly relevant for data centre operators aiming for 24/7 carbon-free energy matching. This approach allows businesses to align their energy usage with renewable generation on an hourly basis, addressing the variability of renewable energy sources. Currently, some data centre operators have achieved 100% renewable energy sourcing by purchasing RECs equivalent to their electricity consumption. However, this method often results in a mismatch between the timing of energy consumption and renewable generation.
Implementing time-stamped RECs can help data centres more accurately match their energy usage with renewable supply, enhancing their sustainability efforts. In Australia, formal frameworks for time-stamping are still under development.
Data centre offers
Forster wines that businesses that have their own ESG ambitions may choose to have data centre contracts where the energy component is supplied by renewable energy, time-matched energy or possibly a net zero solution. Also, the data centre owner would need to consider how they price the underlying energy; as a fixed price, market exposed or a combination of both. Each of these categories, he said, could be packaged as an energy offering, keeping in mind the offers would change, or new ones could be made, post 2030.
He said another consideration in passing through energy costs to customers is network costs. Distribution networks charge users daily standing charges, energy throughput (usually in peak, shoulder and off-peak times) and in some case, peak demand charges. While most data centres connect to the distribution network, some link to the transmission network, which emphasises peak demand in its charging scheme. To pass these charges to customers, data centers must develop a methodology to calculate each customer's share.
Solar has its own nuances too. Installing rooftop solar panels can reduce a data centre’s local energy consumption and may allow for energy export. Systems over 100kW are eligible for Large- scale Generation Certificates (LGCs), aligning with the high energy usage of most data centres.
Small-scale Technology Certificates (STCs) from smaller systems cannot be used for renewable energy claims or GreenPower accreditation. While self-consuming solar power doesn’t generate renewable energy certificates, it provides zero- emission energy and can potentially lower network charges. Exported energy can create additional renewable energy certificates, but this may be less financially attractive if exports occur during periods of low energy market prices.
Forster concludes that while sustainability and net zero aims of their clients may create demand for more bespoke products from data centres that manage their own energy portfolio, things are about to get a whole lot more complex for data centre operators to navigate.
[1] https://wattclarity.com.au/articles/2025/01/data-centres-clean-energy-and-net-zero-ambitions/
The W.Media Melbourne Cloud & Datacentre Convention 2025: Transforming Enterprise, Datacenters & Cloud in Victoria – colocated with Interconnect World – returns on 3 April 2025 at CENTREPIECE at Melbourne Park. The convention takes place as the city achieves recognition as a growing leader in digital infrastructure. Equinix recently described Melbourne as the fastest growing ‘edge metro’ in the world and analysis from DCByte indicates a substantial forward programme of build which could see capacity across the metro area move over the next few years towards 1 GW.
Our Convention for Melbourne in 2025 will focus on the key factors and requirements that are driving enterprise demand and which will drive growth and direction in future demand for digital infrastructure. The emergence of AI and digital technologies will be considered particularly in terms of the profile of different user profiles and requirements. The decisions made on the basis of
‘sustainability’ will also be discussed and broadened to include the issues of how far corporate brand objectives drive technology decisions and the value of achieving an overall industry identity locally and beyond. Other impact factors from both inside and outside the industry each command their own discussion – hyperscale, legislation, risk and security, connectivity needs.
To view the agenda or plan your visit, please visit:
https://clouddatacenter.events/events/melbourne-convention-2025/
[Author: Simon Dux]
