AUSTRALIA Trends and Developments Contributed by: Alexander Danne, Roy Groom, Rohit Venkat and Georgia Summerhill, Clayton Utz
sis prepared for the AEMO indicates that data centre electricity consumption across the NEM is forecast to grow at an average annual rate of 25.1%, from approximately 3.9 terawatt hours in FY25 to 12.0 ter- awatt hours by FY30 under the Step Change scenario. In response to this significant market activity, the Department of Industry, Science and Resources has published “expectations” that it believes will incen- tivise investment aligning with the nation’s interests. Expectation 2 sets out the requirement that new data centres and AI infrastructure should not put upward pressure on energy prices and should make a positive contribution to Australia’s energy transition. Specifi- cally, the expectation is that data centres will: • secure new and additional clean energy generation and/or storage to offset demand; • cover their share of transmission and distribution infrastructure costs; • minimise their energy demand and emissions by adopting industry-leading efficiency measures and technologies; and • improve the overall security and stability of the energy grid – eg, by enhancing demand flexibility and opportunities for peak-load management and appropriate sharing of consumption data. The Australian Energy Market Commission is drafting a proposal which requires data centres to “fully off- set” all of their power requirements using renewable energy. In an official communiqué published in June 2026, every state and federal energy minister except Queensland’s David Janetzki agreed that data centres needed to “fully offset their electricity demand” via investment in additional renewable energy and stor- age. These indications offer a substantial opportunity for financial investment in renewables as demand grows and power purchase agreements become more prominent in the space, with Amazon recently signing nine PPAs totalling 430 megawatts to support its data centre expansion. The significance of this demand signal for the energy sector cannot be overstated. Data centres are emerg- ing as long-duration, creditworthy demand anchors capable of underpinning Final Investment Decisions for renewable energy projects at scale. Their finan-
cial characteristics – including robust balance sheets, long-term energy requirements and sustainability commitments – position them uniquely to provide the revenue certainty that project developers need to achieve financial close. Data centres have already secured renewable energy PPAs generating approxi- mately 1.5 terawatt-hours of clean energy annually, equivalent to around 40% of their annual energy con- sumption, and these PPAs are typically signed before renewable projects secure financing, providing critical revenue certainty for investors. This dynamic has the potential to revive a substantial number of stalled or “zombie” projects – developments that have received planning approval but have been unable to reach financial close due to the absence of a creditworthy offtaker or insufficient revenue cer- tainty. Australia’s renewable project pipeline includes over 2,100 projects in various stages of development, yet many remain dormant because developers cannot secure the long-term offtake agreements that lenders require before committing capital. The emergence of data centres as major energy buyers willing to enter into long-term PPAs of ten years or more could pro- vide precisely the commercial underpinning needed to unblock this dormant pipeline. As BNEF analysts have noted, while data centre demand growth could be stymied by the same bottlenecks plaguing wind, solar and storage developers, it would equally be “a relief for developers struggling to get their projects to financial close”. However, realising this opportunity is not without chal- lenges. The constraints slowing renewable deploy- ment, including long project development timelines, grid connection delays and social licensing chal- lenges, could equally become a brake on data centre development if load growth accelerates faster than the pace of clean energy supply additions. The alignment of data centre demand with renewable supply addi- tions will require coordinated governance and plan- ning at both state and federal levels. Financing Difficulties and Approval Bottlenecks Despite the scale of Australia’s renewable energy ambitions, significant financing difficulties and approv- al bottlenecks endure across the development pipe- line. The renewable energy sector recorded AUD12.7
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