Latest / The Front / Our energy grid can’t power AI data centres. Do we need nuclear?

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Our energy grid can’t power AI data centres. Do we need nuclear? · The Front

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  Speaker 1: From The Australian, here's what's on the front. I'm Claire Harvey.
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  Speaker 1: It's Wednesday, September 23, 2026.
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  Speaker 2: Indigenous leader Noel Pearson says Western Australia should adopt his
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  Speaker 2: pioneering Cape York model to keep Aboriginal children safe. Pearson
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  Speaker 2: says it supports family members and communities to care for
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  Speaker 2: at-risk children. The Australian revealed three kids in the WA
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  Speaker 2: city of Port Hedland were murdered by their drug-addicted mother
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  Speaker 2: after being kept from their grandma's care by the state's
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  Speaker 2: child protection services. Labor's renewable energy revolution would be systematically
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  Speaker 2: dismantled by the coalition if they win.
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  Speaker 1: The next federal election.
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  Speaker 2: The opposition's vow has reignited Australia's energy debate, just as
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  Speaker 2: the Australian's Energy Nation Forum comes to town. That's where
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  Speaker 2: the most influential figures meet to fight out the future
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  Speaker 2: of Australia's energy policy. Today, Chief Business Correspondent Perry Williams
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  Speaker 2: joins me to set the scene. We were making a
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  Speaker 2: different choice and we were moving in a different direction.
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  Speaker 2: Tens of billions of dollars are flowing in from big
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  Speaker 2: tech companies to build data centres. To power these products
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  Speaker 2: that are being used by tens of millions of Australians.
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  Speaker 2: Here the boom in data centres isn't slowing and tonight
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  Speaker 2: there are warnings that will make our housing crisis even worse.
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  Speaker 2: Perry Williams is the Australian's chief business correspondent, and like me,
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  Speaker 2: he'll be at Energy Nation this morning. Perry, the biggest
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  Speaker 2: story in town at the moment is data centres. The
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  Speaker 2: government seems to think that this is the bold new future.
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  Speaker 2: It's certainly going to be good for the economy if
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  Speaker 2: we bring a whole lot of data centres on stream
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  Speaker 2: in Australia. But I really wonder, how much pressure do
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  Speaker 2: these data centres put on our energy grid?
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  Speaker 3: Yeah, great to be here, Claire. They put a lot
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  Speaker 3: is the first thing to say. Yeah, we haven't seen
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  Speaker 3: a new industry like this. It's a bit of a
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  Speaker 3: revolution for the power grid. And just to step back
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  Speaker 3: a little bit, it was only a couple of years
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  Speaker 3: ago that actually... energy demand was actually falling quite rapidly
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  Speaker 3: in Australia, you know, as some of the big electricity
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  Speaker 3: users started to taper off. So data centers completely flipped
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  Speaker 3: the script. Now we've got this massive demand for energy, renewables, batteries,
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  Speaker 3: all sorts of energy types. The way it works is
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  Speaker 3: it's an instant impact on the power grid. And we've
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  Speaker 3: already seen some warnings from the grid operator AEMO about
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  Speaker 3: the fragility of the grid if, say, one of these
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  Speaker 3: data centres has a trip in the system that could
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  Speaker 3: kind of have a cascading effect on the power grid.
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  Speaker 3: So it's a lot of work happening behind the scenes,
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  Speaker 3: but it's definitely a risk.
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  Speaker 2: It's high-stakes negotiations too between the government and the AI
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  Speaker 2: companies on one hand and then the government, federal government
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  Speaker 2: and the states. So the government is saying we want
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  Speaker 2: these data centres to contribute to the growth of renewables.
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  Speaker 2: If you want to build a data centre here, it
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  Speaker 2: has to be powered by renewables and you have to
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  Speaker 2: be a net contributor to our renewable energy supply.
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  Speaker 3: We cannot revisit this issue after companies have built whatever
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  Speaker 3: they want, wherever they want.
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  Speaker 1: And try to then reopen negotiations.
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  Speaker 2: The AI companies are saying, OK, well, yeah, maybe we
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  Speaker 2: can talk about that only if you amend the copyright
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  Speaker 2: law in the way that we want.
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  Speaker 1: And some of the states and territories are.
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  Speaker 2: Saying, yeah, no thanks, we want to power them with
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  Speaker 2: coal or gas.
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  Speaker 1: So, I mean, where does that end up? Is it
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  Speaker 1: actually going to be a net contributor to our renewable
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  Speaker 1: energy supply?
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  Speaker 3: Yeah, it's a little bit of a mess, like things
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  Speaker 3: often are with energy policy in Australia. Look, it started
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  Speaker 3: in a good place in terms of the ideology of it.
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  Speaker 3: The idea was these data centres are going to suck
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  Speaker 3: a lot of power from the power grid. Let's make
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  Speaker 3: it renewable energy.
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  Speaker 1: To be net generators, not net users.
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  Speaker 3: To build new renewable generation and firming to strengthen energy.
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  Speaker 3: So Anthony Albanese created these new rules and they went
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  Speaker 3: to the sort of energy ministers' meetings, national cabinet. As
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  Speaker 3: you said, Queensland and the Northern Territory, a lot of
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  Speaker 3: gas and obviously in Queensland, coal as well. Queensland owns
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  Speaker 3: a lot of its generation, so it's a little bit
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  Speaker 3: different to New South Wales and Victoria. They said, you know,
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  Speaker 3: we want to be able to draw on our own
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  Speaker 3: natural resources. Sure, we'll have renewables, but we don't want
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  Speaker 3: to have this mandate What it's meant is it's a
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  Speaker 3: bit murky as to exactly how this is going to
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  Speaker 3: play out. All the big data center operators are saying, look,
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  Speaker 3: we're fully on board with the PM's vision. But if
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  Speaker 3: you do a bit more digging beneath the surface, what
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  Speaker 3: you see is this real mismatch between the data centers,
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  Speaker 3: the AI factories, which want to come online in 12
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  Speaker 3: months time with these new factories. And You know, we
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  Speaker 3: talk to the energy producers who are like, look, it's
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  Speaker 3: going to take longer than that. This is Australia. There's permits,
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  Speaker 3: there's planning, there's construction. It can take five or six
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  Speaker 3: years to get a new wind farm up and running
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  Speaker 3: in Australia. So I think this is going to be
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  Speaker 3: the next energy crunch.
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  Speaker 2: Queensland might still believe in coal, but across Australia, coal
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  Speaker 2: is clearly on the way out. We're seeing the retirement
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  Speaker 2: of coal-fired power plants across the country.
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  Speaker 1: How long has coal got?
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  Speaker 3: Yeah, it depends a little bit state by state. You're right,
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  Speaker 3: Queensland could still be running until 2050, so middle of
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  Speaker 3: the century. So they've got a long runway and they
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  Speaker 3: can kind of make that call, you know, as I
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  Speaker 3: was saying, state-owned generators. New South Wales, you know, the
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  Speaker 3: biggest coal plant in Australia, Araring, is due to come
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  Speaker 3: out in a couple of years. And down in Victoria,
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  Speaker 3: you've got Yallourn mid-2028, so that's not too far away now.
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  Speaker 3: And then there's sort of a staggered process, you know,
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  Speaker 3: the likes of Loyang and so on coming out in
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  Speaker 3: the early 2030s. So, look, within a decade, I think
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  Speaker 3: the stat is about 80% of current coal will be
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  Speaker 3: gone by Queensland really the slight exception there. And look,
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  Speaker 3: there's this big renewables pipeline coming through, but there's just
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  Speaker 3: probably a little bit of concern at the scale of
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  Speaker 3: the transition as you move from these different electricity types.
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  Speaker 3: We're lagging behind a bit with the renewable build-out as well.
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  Speaker 3: So I guess people are wondering a little bit what
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  Speaker 3: the backstop is and what the plan B is.
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  Speaker 2: One of the big plan Bs was supposed to be
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  Speaker 2: Snowy Hydro 2.0, this idea of pumping water uphill and
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  Speaker 2: then bringing it back downhill when you need to generate
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  Speaker 2: some energy on demand. Every time I read about Snowy
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  Speaker 2: Hydro 2.0, it seems to be stuck and something's wrong
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  Speaker 2: with one of the tunnelling machines. What is actually happening there?
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  Speaker 3: Look, really tough project, this one. Obviously championed by Malcolm
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  Speaker 3: Turnbull for a couple of billion dollars.
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  Speaker 1: These are big dreams in these mountains. Real courage. a
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  Speaker 1: belief in the future, a confidence in Australia.
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  Speaker 3: The numbers are absolutely eye-watering now. You're looking at 20, 30,
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  Speaker 3: possibly 40 billion dollars to build this thing. It's an
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  Speaker 3: incredible engineering feat. I think anyone who's travelled to see
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  Speaker 3: the original Snowy Hydro scheme would attest to that. But
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  Speaker 3: to your point, incredibly complex geology, the sheer cost of
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  Speaker 3: building this has just become pretty questionable, I think.
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  Speaker 1: Florence, one of the four tunnel boring machines, was stuck
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  Speaker 1: for 11 months. when she caused a sinkhole just 150
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  Speaker 1: metres into the dig.
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  Speaker 3: So, look, it will get built. It will be a
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  Speaker 3: valuable resource, but at what cost? And just to remind listeners,
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  Speaker 3: this is taxpayer funding, so it's 100% owned by the
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  Speaker 3: federal government, so it's not a private company, and there
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  Speaker 3: is real concern both about the cost but also delays
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  Speaker 3: and when this thing will finally come online.
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  Speaker 2: Coming up, could Australians' love of solar come back to
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  Speaker 2: bite us? Australians have taken up record solar in world-beating levels.
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  Speaker 1: I think we're the world leaders in domestic rooftop solar.
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  Speaker 2: That also means the installation of domestic batteries and reselling
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  Speaker 2: into the grid seems to have lost a lot of
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  Speaker 2: its appeal. The tariffs that people get for doing that
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  Speaker 2: are negligible. It's also, though, putting a lot of pressure
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  Speaker 2: on the grid because there are some times when there
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  Speaker 2: is not a lot of household demand being drawn off
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  Speaker 2: and then all of a sudden the sun stops shining
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  Speaker 2: and the.
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  Speaker 1: Demand is back.
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  Speaker 2: Can our grid actually be stable with this level of
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  Speaker 2: rooftop solar?
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  Speaker 1: Are we going to reach a point where it's just
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  Speaker 1: not sustainable anymore?
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  Speaker 3: The promised land where the government wants to get to
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  Speaker 3: and where a lot of the energy companies want to
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  Speaker 3: get to is what are called sort of virtual power plants. Now,
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  Speaker 3: it's sort of a complicated name, but you can see
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  Speaker 3: the path there. Essentially, it's solar batteries and an EV.
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  Speaker 3: So you can imagine even... We're seeing it now, aren't we?
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  Speaker 3: But even in a few years' time, you can see
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  Speaker 3: that becoming much more common. What that will mean is
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  Speaker 3: your solar will obviously power your house. It can go
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  Speaker 3: into the battery. It can charge your EV. It can
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  Speaker 3: also charge your household as well. And we're just not
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  Speaker 3: quite there yet.
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  Speaker 2: We started this conversation talking about the AI companies. Overseas,
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  Speaker 2: something that they're doing is buying up old nuclear-fired power
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  Speaker 2: plants or building their own. That's not available to them
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  Speaker 2: in Australia where we don't have nuclear energy. Is there
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  Speaker 2: any change likely there? Could AI be the thing that
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  Speaker 2: changes our attitude towards nuclear?
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  Speaker 3: I think a couple of years ago, nuclear did seem
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  Speaker 3: like it was a dead conversation in Australia. But you
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  Speaker 3: look at the sheer amount of money, you know, the
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  Speaker 3: hundreds of billions of dollars of investment coming into Australia
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  Speaker 3: or sort of from nothing. Perhaps there is a chance
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  Speaker 3: down the road for nuclear. We've got these massive volumes
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  Speaker 3: of energy that need to be found in the next
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  Speaker 3: five or 10 years. We've got these big renewable bottlenecks.
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  Speaker 3: So it seems difficult for everything that's been promised to
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  Speaker 3: be built. So perhaps there is a chance for another
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  Speaker 3: energy source.
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  Speaker 2: Perry Williams is The Australian's Chief Business Correspondent. You can
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  Speaker 2: follow all the action from the Energy Nation forum at theaustralian.com.au.