Mandating additional renewable energy for Australian data centres

Climate Capital Forum is concerned that the Government is considering backing away from  requiring large data centres to fund new renewable generation and firming. We urge the introduction of a 110 per cent minimum renewable energy contracting of each site’s demand, and for the government to hold firm as the standards and legislation are finalised.

Introducing a 110%+ requirement that obligates data centres to bring more than their own renewable power needs is essential so that Australia doesn’t repeat the mistakes of the east coast LNG market establishment, and puts Australia back on track for our renewable energy goals and climate targets.

Lax regulation allowed LNG exporters to suck out more gas from the market than they produced, with the costs borne by households, workers and industry across the east coast. Data centre operators could do the same, but for the electricity market, unless strong provisions are introduced urgently.

The treatment of data centre energy requirements is one of the most important demand-side decisions in the energy market this decade. AEMO’s 2026 forecast has NEM data centre demand rising from ~5 TWh today to 34 TWh by 2035-36, from 3% to 13% of total demand, with 225 projects in the connection pipeline. This is a new, fast-growing load that risks extending the life of coal and gas plants, driving up electricity prices, out bidding existing industry for new energy needs from electrification, and making Australia’s carbon reduction and reindustrialisation goals harder to achieve. 

This isn’t theoretical, and is already playing out in Tasmania with data centre developments outbidding local industry and risking the future of heavy manufacturing in the state.

Furthermore, the pipeline of renewable projects is strong and ready to go – what is lacking is firm offtake contracts to pull projects through to Final Investment Decision. 

Source: IEEFA Renewable Energy Scorecard, Sept 2026

Renewable projects can be built at speed and scale with the right support. For example, the 131 megawatt Winton North Solar Farm in Victoria completed the installation of all solar panels at the site in September this year – just two months after achieving financial close.

In developing the framework governing data centres and their energy requirements, Climate Capital Forum recommends the following:

• Ensure a nationally consistent framework with no state opt-outs or coal and gas carve-outs;
• Ensure genuine new renewable generation is required at 110%+ of each sites planned demand – clear bring your own renewables plus rules will mitigate the risk of data centres growing at the expense of the rest of the economy, driving up electricity prices and emissions, and driving other firms out of business;
• Keep firming clean via battery storage, not gas – data centres should be obligated to contract, co-invest in, or directly build the firmed renewable generation and storage needed to serve their own load, rather than relying on general grid supply.

A clear “bring your own new clean energy” rule gives developers bankable, long-term anchor customers. It brings forward generation, storage and transmission that the whole grid benefits from. And it gives capital the certainty it needs to commit at scale, rather than waiting to see which way the rules fall.

We urge Government to require any data centre BYO-power surplus or curtailed renewable output to be made available to co-located industrial users (via PPA facilitation or common-user infrastructure), so anchored data centre demand can help build out capacity that industry then also draws on, rather than the two competing head-to-head at the cost of existing industries and long term jobs.

We also urge the Government to keep in view the core public interest principles of 110% renewable supply, grid stability, responsible siting, efficiency, responsible water use, transparency, social licence and workforce development. 

Getting this right is critical to achieving Australia’s clean energy targets and delivering affordable, renewable energy to Australians.