Data centres boom hoovering power. But there's a growing problem

The road into the Golden Plains Wind Farm is like any other surrounding the tiny Rokewood township in Victoria's south-west — until you reach the turbines. 

More than 200 stretch towards the clouds across 16,000 hectares of farmland, like a row of thin giants.

"It's the biggest wind farm in the Southern Hemisphere and injecting about 9 per cent of Victoria's annual energy demand," said TagEnergy managing director Andrew Riggs.

In the next few months, it will almost double in capacity, from 756 megawatts to 1.3 gigawatts — almost the equivalent of a coal-fired power station.

Now that it's up and running, the demand is fierce — and increasingly, it's coming from one place.

"We've got two large customers. One is Amazon, another is Equinix," Mr Riggs said.

"They want to provide green energy for their services. Their customers demand it, and we're able to supply them through this project."

Between them, the two data centres will hoover up more than 25 per cent of the energy here: about 352MW.

A power-hungry industry 

Data centres are expanding rapidly in Australia, and Melbourne is the fastest-growing market, with $6 billion in capital investment in the sector in the last year, according to the Victorian government.

The first was built in 2012, and 50 of them are now operating in Victoria, concentrated around Melbourne's west.

At capacity, they are permitted to draw up to 840MW from the grid, although Australian Energy Market Operator (AEMO) data indicates they currently consume about one-quarter of that.

By 2030, their energy consumption in Victoria is set to quadruple.

Ten data centres have been approved for construction, with a further eight under planning assessment.

Now, in place of the cloud, it's AI that is driving demand and the consumption that comes with it.

One of the biggest providers is Airtrunk.

It says it operates like a landlord for tech companies and delivers the building, cooling and, critically, the energy to meet their requirements.

"Some of our largest customers are big US hyperscalers, like your Microsoft and Amazon," said Sabooh Whitelaw, the company's utility and energy associate vice-president.

Ms Whitelaw said the demand from tech companies to operate in Australia was "insatiable".

"We have a high degree of renewables, we have vast land, we have stable government, so we are generally seen as a very favourable location to have data centres," she said.

The company says it consumes about 255MW of energy across Australia, and the total capacity it expects to draw from the grid by 2030 is 1.3GW, about the same as what the Golden Plains Wind Farm produces as a whole.

So far, the red carpet has been rolled out to meet the demand.

Over a week in September, Melbourne hosted the inaugural Data Centre Excellence Awards and an international expo, complete with robotic dogs and portable modular data centres.

"We welcome this industry," Artificial Intelligence and Digital Economy Minister Anthony Carbines told the expo audience. 

But the minister was also careful with his words.

"We welcome every company prepared to build here responsibly and sustainably," he said.

Mr Carbines said data centres brought "an extraordinary amount of pressure landing on electricity grids, water systems and local communities in a very short period of time".

"Engage communities early, keep them informed, and share the benefits, and they will make room for you," he said.

That might be easier said than done.

Growing opposition and an aging grid

Community angst is growing over the fast pace of development, with concerns centred around the vast amounts of energy and water required to power the biggest, hyperscale centres.

Several local government areas across Melbourne have already implemented moratoria on new data centre developments, including the City of Maribyrnong, Hume and Brimbank.

The Greens have called for a moratorium nationwide "until there are laws in place to properly regulate their impact in Australia including energy, water use, environment and communities".

In August, the Energy and Climate Change Ministerial Council reached an agreement that data centres needed to bring new, firm, renewable generation online to match their own demand.

All of this comes at a time when Victoria's aging coal-fired power stations are reaching the end of their lives.

The latest projections from the Energy Market Operator indicate the state has no significant electricity supply buffer beyond 2029.

"I think everybody now agrees that Yallourn is cactus and will not be sticking around past 2028," said Australian Industry Group's climate change and energy director Tennant Reed.

"That's a big chunk of supply to replace.

"If we don't get an adequate mix of new resources into the market that can meet demand, well, we can be pretty confident wholesale electricity prices will go up."

With 18 new data centres in Victoria's pipeline, there's now even more power to find.

And every sector working to decarbonise will now be competing with them for green energy.

"We don't expect that the existing supply will cover our new demand," Ms Whitelaw said.

"We do think renewable generation and transmission projects all need to be coordinated together to bring on as much supply as we can so we don't end up with a deficit."

Enter One Nation, whose state and federal leaders spoke before a rural crowd in August beside a coffin brandished with the words "RIP net zero".

The event at Marnoo, in western Victoria, was organised by Farmers Fightback, a group of landholders opposed to a high-voltage transmission line designed to expand Victoria's access to the New South Wales electricity network and tap into long-duration storage from Snowy 2.0.

It is known as the Victorian to NSW Interconnector West, or VNI West.

The national upgrade has been in the works for almost a decade, after the South Australian blackouts prompted an infrastructure review.

AEMO identified "increased consumer costs and risks" posed by the existing transmission system and called for network investments "as soon as possible".

But the project has been beset by delays and multi-billion-dollar cost blowouts that put the price tag anywhere from $7.6 to $11.4 billion.

Those opposed to the plan because of its cost and the footprint on private farmland are vocal, and at the Marnoo event, One Nation was speaking their language.

"Your property rights have been stripped from you," Ms Hanson told the crowd.

"This net zero rubbish has been forced down Australians' throats and should never have happened.

"The only barrier stopping it, I'm telling you, is One Nation."

The Coalition has now promised to also scrap the VNI West project if elected, but it's more careful about a second proposed high-voltage transmission line, known as the Western Renewables Link, which would need to be built first

The 190-kilometre project between Sydenham and Bulgana is slated to bring 3GW of large-scale wind, battery and solar developments from the state's west to the grid, increasing the supply by about one-third.

It has now received environmental approval from the Victorian government and is awaiting final approvals from the Commonwealth and parliament before land acquisitions or construction can begin.

In the meantime, a new independent cost assessment has also been ordered by the premier to appease community concerns about the now $1.5 billion project. 

Energy supply 'on knife's edge'

The Coalition is unhappy the announcement was made so close to the election.

"We've said we will pause and review the transmission plan," Victoria's Shadow Energy Minister, David Davis, said.

"Those projects need to be delivered in a timely way but also in a properly budgeted way.

"They need to have their costs constrained so the costs are not put onto families."

Some landholders remain opposed to the plan, although 50 per cent have now signed on to receive compensation amounts for easement use, and the vast majority of remaining landholders are in active negotiations with the provider, AusNet.

They stand to receive $56,000 per hectare of transmission easement hosted on their properties, as well as compensation ranging from tens of thousands to multi-millions of dollars depending on the land size.

If approved, the transmission line is due for completion in 2029, after Yallourn, the aging coal-fired power station in Victoria's east, is due to retire.

The Australian Industry Group, which represents 60,000 businesses across manufacturing, construction, technology and logistics, regards the project as "vital" for the state's energy mix.

"Any incoming government would be likely to think twice before stopping that project," Mr Reed said.

"Because it's providing a significant amount of additional energy to the state in the fairly near future. And it would be extremely hard to gin up any alternative supplies in that timeframe."

Mr Reed said the "eye-watering" growth in data centres only increased Victoria's energy needs, and the state was on a "knife edge" in the coming years to ensure supply was met.

"Western Renewables Link, if it isn't there, would take us one big step closer to brownouts," he said.

At its official Victorian launch in Gippsland this month, One Nation said its focus was on extending the life of existing coal-fired plants in Victoria and potentially building new ones.

Pauline Hanson has also flagged nuclear as an option.

"We've got to get smarter, and if we're going to do it, you have to have nuclear power to run AI," she said.

Notwithstanding the federal ban on nuclear power, the CSIRO estimates the lead time for a new plant to be 15 years.

Mr Reed said setting aside the social license and investment interest needed to build new coal plants, neither of those options were possible in the near term.

"We would certainly hope in the business community that anybody who forms the next government of Victoria will take that knife edge that the state rests on very seriously and sustain a build out of assets that we can deliver and that we can afford," he said.

The Golden Plains Wind Farm has no skin in the game in the debate around new transmission lines.

That's because it was established beside another high-voltage transmission line built in 1980 to bring energy from one side of the state to power the Alcoa aluminium smelter in Portland.

An ABC report from the time revealed Alcoa was required to pay $21 million dollars towards the $100 million amount, with taxpayers and consumers paying the rest.

Mr Rigg said without the Alcoa line, the Golden Plains Wind Farm couldn't operate at capacity.

"Transmission is essential to renewables. It provides both diversity of supply from interstate, from other regions, when power is at a surplus or at a deficit.

"And then it also provides, obviously, locations like this, where you can then cut in and add to the line to provide the supply.

"Certainly we've got peers in the industry who are dependent upon some of those plans going forward."