National

Data centres spruiked as energy grid 'shock absorbers'

Feb 25, 2026

Power lines — Data centres are big consumers of energy, raising questions about their suitability in Australia. -AAP Image

The second-biggest pipeline of data centre investment in the world should be viewed as a vote of confidence in Australia's energy system, says the federal climate change minister.

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Energy and Climate Change Minister Chris Bowen says Australia has the renewables resources to host energy-hungry data centres but it is important they interact flexibly with the grid to prevent outages.

"We've got to ensure that those data centres, as they are built, are building extra capacity, redundancy, so it can become a flexible shock absorber," he told a Nature Conservation Council business breakfast on Wednesday.

"Our biggest energy user in NSW is an aluminium smelter, but it's also a shock absorber.

"When we need it to turn down, it does."

The world's fleet of data centres is growing rapidly to accommodate the rise of artificial intelligence tools and Australia has become a favoured destination for new facilities.

Data centres are big consumers of energy and water however, raising questions about their suitability in Australia as it struggles to roll out renewables fast enough to replace ageing coal power stations and meet its climate goals.

Frameworks around the energy and water usage associated with AI infrastructure were promised in a national plan released last year.

Mr Bowen was also spruiking a 1.9 per cent reductions in domestic greenhouse gas emissions in the year to September 2025, based on quarterly figures.

Renewables squeezing out coal was part of the story as were more electric cars on the road, fuelling the first fall in transport emissions since the COVID-19 pandemic.

New Vehicle Efficiency Standards brought in early last year were driving a "massive" increase in the availability of electric cars for consumers, the minister said.

To reach Australia's emissions-reduction target of 62-70 per cent by 2035, the Climate Change Authority says nearly 80 per cent of all new vehicle sales will need to be electric by the middle of next decade.

The Australian Conservation Foundation's climate program manager Gavan McFadzean said the nation was making progress but emissions cuts were off the pace needed to achieve climate targets.

"The latest figures show Australia's emissions are being cut at half the pace needed to reach our 2030 target and at just 35-40 per cent of the annual pace needed to reach the 2035 target range," Mr McFadzean said.