Chris Bowen vows to override Queensland and NT to force renewables-powered AI datacentres | Datacentres

The energy minister, Chris Bowen, says the federal government will override state governments that oppose new national rules on datacentres, with commonwealth legislation forcing new AI datacentres to be powered by renewable energy and banning those fuelled by gas.

Bowen said he expected his counterparts in Queensland and the Northern Territory – who had protested against the new federal rules at a meeting last week – to be unhappy with the move, but said the Albanese government was committed to powering the AI revolution with renewable energy.

“We will legislate as a commonwealth. The constitution is clear about the power of commonwealth legislation. I respectfully disagree with Queensland and the Northern Territory,” Bowen told the National Press Club on Wednesday.

The Australian Energy Market Commission warned that without rule changes such as those proposed by Bowen, the costs of bringing large datacentres online “will be paid for in part by customers” rather than big tech companies.

The prime minister, Anthony Albanese, last month pledged to legislate binding standards for AI datacentres, including on locations and energy use, with new national rules requiring them to rely on new renewable energy, minimise water use and maximise energy efficiency, pay for their grid connection costs and “put at least as much energy into our grid as they take out of it”.

Queensland and the NT last week opposed the changes in a meeting of state and federal energy ministers, despite all other states backing the plan. Queensland’s David Janetzki called the federal proposal “underdeveloped ideas that hand increased power to Canberra”.

The NT has proposed a major datacentre powered by gas from the controversial Beetaloo basin development.

But Bowen on Wednesday confirmed federal legislation would mandate the rules set out by Albanese. He said while gas had a “role to play” in firming up datacentre power use, “if a datacentre is proposed to only use gas, it will not meet the national minimum standards and it will not be allowed to register and will not be able to proceed”.

“While I always prefer to work with my state and territory colleagues, the commonwealth will not be standing by and letting a race to the bottom of states falling over themselves to attract datacentres, at the cost to household bills, reliability or emissions,” he said.

“We will use all the powers available to the commonwealth, including commonwealth legislation, to ensure that Australian households and Australian energy reliability is put first: even if some states have different ideas.”

The NT government was contacted for comment. Janetzki said his government “look forward to discussing” the issue at an upcoming national cabinet meeting on AI, but said his state “will not force uneconomic investment into the system”.

In a Q&A session after his speech, Bowen disputed the characterisation that Canberra would “force” states to comply, but stated that federal laws would override states.

“We’ll engage in our levers. The clearest one is obviously commonwealth legislation. We’re going down that road.”

Bowen said that while Albanese would soon confirm details of the federal legislation, new datacentres would have to prove the source of their renewables, how much power they were offsetting, that they would have backup power and that they would be “flexible” with use at peak times to stabilise the grid.

On Wednesday, the AEMC, the national body for the power grid, advised that datacentres should have to show renewables certificates. The AEMC said this was to ensure “their connection doesn’t tip the supply-demand balance and push up wholesale prices for everyone else”.

“Datacentre growth does not have to come at a cost to other consumers, but that depends on getting the settings right from the start,” the AEMC chair, Anna Collyer, said. “Our starting point is simple, this growth must not leave other consumers worse off.”

The AEMC said power operator Transgrid had seen “an unprecedented increase” in new connection requests in western Sydney, with about 8 gigawatts about to be connected to the grid – “on par with the entire average daily demand for NSW”.

The AEMC warned that, without changes to energy rules, grid connection costs for datacentres would be felt “across the consumer base at no clear consumer benefit”.