Politics with Michelle Grattan: Andrew Charlton’s warning on data centres’ impact on power bills

Federal officials have raised alarms about potential surges in household and business power prices if artificial intelligence (AI) data centres rely heavily on non-renewable energy sources such as coal or gas, according to Andrew Charlton, the Cabinet Secretary and Assistant Minister for Science, Technology and the Digital Economy. Charlton made these remarks during an interview with The Conversation’s politics podcast ahead of a National Cabinet meeting that resulted in a compromise allowing some states to use fossil fuels to power their data centres. Charlton emphasized that the government aims to prevent data centres from contributing to rising energy costs by requiring them to use newly developed renewable energy sources rather than drawing from existing reserves of coal or gas. He explained that if data centres were allowed to use existing energy sources, they would compete with households and businesses for limited resources, pushing up prices. However, the recent National Cabinet meeting saw Queensland and the Northern Territory secure permission to use coal and gas for their data centres, marking a shift from earlier federal positions. Residents in areas adjacent to data centres have voiced concerns about the impact on their quality of life. Sean Brown, a resident of West Footscray, described living near one of the largest data centres in Australia, NextDC’s M3 facility, as challenging. The facility, located just 300 meters from his home, produces a constant hum audible even 100 meters away. Ongoing construction has led to persistent noise and light pollution, along with disruptions in street parking and occasional complete loss of power for entire neighborhoods without prior notice or compensation. Brown expressed worries about health risks associated with proximity to the data centre and the long-term implications for his community. The M3 site, branded as "Australia's largest hyperscale AI factory," is set to expand significantly by 2027, increasing its footprint to 10 hectares and consuming 225 megawatts of power continuously. Another facility, the Perri Melbourne Data Centre (PMDC), has also been approved for development in the same neighborhood. Prime Minister Anthony Albanese announced new national rules aimed at preventing future data centres from being constructed near homes, schools, or prime agricultural land. These regulations require developers to contribute more renewable energy to the grid than their data centres consume, minimize water usage, and ensure that new sites are appropriately sized and located to avoid displacing potential housing developments. Albanese stressed the importance of maintaining public support for data centre investments by ensuring energy costs remain stable, water security is preserved, and locations are suitable. Despite these new guidelines, residents like Brown argue that current data centres, which have already caused disturbances, are not subject to these restrictions. He questioned the effectiveness of the new rules if they fail to address the issues faced by communities already impacted by existing facilities. Brown called for expanded regulations that would apply to all data centres, not just new ones, to provide relief to those living in affected areas. The debate over data centres highlights the tension between economic growth driven by technology and the need to protect residential environments from industrial encroachment. As Australia moves forward with its AI strategy, balancing these interests will be crucial in shaping policies that both encourage technological advancement and safeguard community well-being.