Why are data centre companies cosying up to fossil fuel giants?

If you want to open a data centre in Australia, there are guidelines you can follow. But they’re optional.

Given the drain these centres — such as those slated for Macquarie Park and Lane Cove — have on energy and water resources, Greenpeace called this week for a halt on all developments until clear, mandatory safeguards are set in stone.

What happened: The Greenpeace report calls for full disclosure on energy use and emissions, compulsory use of renewable energy, and transparency on what data centres are used for.

The report points to established concerns such as the impact data centres will have on  Australia’s climate goals, but also looks at data centre operators cosying up with fossil fuel companies to power their operations.

Lead author Ketan Joshi is an energy expert who has been analysing and writing about the growth of data centres for two years. He has worked in the renewables sector. Joshi told the Lorikeet even a small proportion of fossil-fuel powered data centres would mean “a major increase in greenhouse gas emissions”. 

This type of project can already be seen in the NSW Southern Highlands, where Cloud Carrier is seeking approval for a gas-fired power plant to power a “data centre campus”.

In Queensland, gas company QPM Energy Limited has been positioning itself to support data centre growth with its gas power stations, announcing on Monday it has “commenced preliminary discussions with data centre companies and intends to accelerate evaluation of co-location opportunities”.

Internationally, these projects are already a reality: Elon Musk’s SpaceX runs gas turbines to power its “Colossus” data centres in Memphis, Tennessee. Even countries like Ireland and Canada, with relatively progressive climate goals, have allowed the development of gas-powered data centres. 

Why do this? Joshi claims data centre companies typically use off the grid gas power as a means of circumnavigating the impacts of centres joining the local energy grid, as well as community concerns about those impacts. 

But the report claims this option would also cripple our emission reduction efforts.

Lobbying: Data Centres Australia, established late last year, is the chief lobbying body for data centres in Australia. Earlier this month, its CEO, Belinda Dennett, appeared as a speaker at a fossil fuel industry conference run by Australian Energy Producers. The panel Dennett appeared on was titled “Energy in the AI age”. 

This group represents data centres companies active in the North Shore, including Goodman, DigiCo and NextDC.

What now: According to Energy Minister Chris Bowen, the government is currently considering regulations on the industry. These decisions are being led by a council of all Australia’s state and federal energy ministers. 

• The federal government has a series of “expectations” on data centres, but they are not enforced.

At its meeting this month, the government tasked the Australian Energy Market Commission with figuring out how a 100 percent renewable requirement for data centres could be established. The advice is due back by July.

What this means for local projects: Some data centres operating on the North Shore claim they are offsetting some of their emissions voluntarily, via renewable credits and Power Purchase Agreements (where they sign contracts with companies building renewable energy). 

Even accounting for this, there is still a gap of grid energy data centres use that they do not replace with renewables. 

If the government was to mandate that centres offset 100 percent of their energy use with renewables, these centres would instead be required to cover the entirety of that gap.

Thumbnail: Australian Energy Producers