Nexa Advisory welcomes the opportunity to respond to the Australian Government’s consultation on Getting it right: Building AI infrastructure that works for Australia.
Nexa supports the Government’s objective of ensuring that large data centres contribute positively to Australia’s energy transition, provide demand flexibility and do not increase costs for other consumers. The consultation paper proposes that covered data centres bring forward new renewable generation with appropriate firming, provide demand flexibility and operate in ways that minimise costs for businesses and consumers. This is also broadly consistent with the Australian Energy Market Commission’s (AEMC’s) recent advice to Energy Ministers, which recommends complementary measures for new renewable generation, firming and demand flexibility.
The challenge now is to ensure these principles translate into investment that can actually be delivered.
Key recommendations
Nexa recommends that the Australian Government:
- Require new data centre demand to bring forward additional renewable generation and appropriate firming. Compliance should support genuine new investment rather than become a certificate-purchasing exercise. Emphasis should be placed on resources that complement Australia’s existing generation mix, including new onshore wind, storage and other firming.
- Make transmission a central part of the AI infrastructure framework. Renewable and firming obligations will not deliver the intended outcome if the generation cannot connect or its output cannot be delivered to the load. Data centre development, generation investment and transmission delivery must be planned together.
- Take a broader approach to transmission delivery and funding. Governments should make greater use of competitive procurement, contestable and privately financed delivery, self-build connection options, non-network alternatives and, where appropriate, public co-investment.
- Protect consumers through clear cost and risk allocation. Data centres should make an appropriate contribution to the efficient network costs they cause or bring forward, while shared costs should be allocated using transparent and economically sound principles that recognise subsequent users and beneficiaries.
- Reward useful flexibility rather than imposing blunt requirements. Flexible connection arrangements, storage, demand response and other forms of flexibility should be enabled and appropriately valued where they provide measurable network or system benefits.
- Unlock commercial and industrial consumer energy resources as part of the solution. C&I rooftop solar, batteries and flexible or controllable load can be deployed relatively quickly and reduce pressure on generation and networks while major transmission and utility-scale projects are delivered.
Read our submission here: Nexa advisory submission – Office of AI