Opinion
10 September, 2026
Opinion: Data Centres Challenge Net Zero’s Viability
Net Zero promises certainty, affordability and reliability—yet falters when governments confront the electricity demands of data centres.
Net Zero promises certainty, affordability and reliability—yet falters when governments confront the electricity demands of data centres.
On 26 August, the National Cabinet met. In spite of the Prime Minister’s insistence that data centres use renewable energy, Queensland Premier David Crisafulli and Northern Territory Chief Minister Lia Finocchiaro resisted Canberra’s proposal.
Both argued that their jurisdictions must have the flexibility to use their own resources, and manage their own energy systems.
The Prime Minister acquiesced. He announced that the different situations between the jurisdictions would be accommodated. However, on the next day, Energy Minister Chris Bowen insisted there would be no exceptions.
He explained, on ABC radio, that the Commonwealth will provide a case-by-case assessment for Queensland and Northern Territory to apply to have fossil fuels provide power to data centres.
Unlike the other jurisdictions, both Queensland and the Northern Territory have their own energy companies. The key criterion is that they must demonstrate that their fossil fuel is cheaper than renewables.
The assessment will be done by the Australian Energy Market Operator (AEMO). However, the Commonwealth retains the final decision. The Minister hinted that the Commonwealth could overturn the AEMO decision.
Is this a defeat for Net Zero? It is not, but it is certainly a ‘kick in the guts’ for Net Zero. If a fossil fuel can be shown to be cheaper, then Net Zero’s idealism has collapsed to the reality of data centres energy requirements.
Data centres require enormous quantities of reliable electricity, every second of every day. AEMO estimates that their share of National Electricity Market consumption could rise from the current 3%, to 4 times this amount within the coming decade.
Wind and solar are valuable energy sources. But transmission lines require land, capital and years of approvals. Batteries do not generate electricity – they simply store it.
Fossil fuels already have the infrastructure in place. This alone may win their case as a cheaper energy supply.
When confronting the reality of power supply to data centres, government does not have the luxury of a preferred energy supply. The power supply must mean reliability, regardless of weather conditions.
Does this mean that data centre fossil fuel supply must not have boundaries? No, it must comply with regulatory, environmental and community standards.
This is directly relevant to the Southern Highlands. The proposed gas-fired plant for data centres must comply with community standards, as well as other requirements. A monstrosity of this magnitude is absolutely inappropriate to be built within Moss Vale’s precinct.
Data centre energy supply may have exposed an underlying weakness in Net Zero’s doctrine. Queensland and the Northern Territory will test Net Zero’s viability. Responsible government governance acknowledges that reality has a higher priority than ideology.
Dr Raymond Khoury PhD
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