Originally published by The Australian.
29.06.2026
The Albanese government’s energy policy underpinning a $150bn data centre pipeline faces renewed opposition from Queensland in a showdown set to complicate federal Labor’s vision for a renewable energy powered investment boom.
Industry Minister Tim Ayres first laid out expectations for data centres in March, with operators ordered to find new renewable energy supplies and pay grid expenses so costs are not passed on to consumers or businesses. Queensland was the sole outlier that failed to approve the plan at a meeting of energy ministers in May.
While Mr Ayres expected the Crisafulli government to fall into line at the next ministers forum in July, Queensland said it still retained significant concerns.
“Queensland’s continued commitment is to affordability and reliability as the foundation of our energy system and that means we expect to see details on costs, benefits, and risks before agreeing to any national proposal that impacts Queensland’s energy system and Queenslanders’ electricity bills,” said David Janetzki, the state’s Treasurer and Energy Minister.
Work was needed before imposing “underdeveloped national proposals to advance other policy objectives”, the minister added, as Canberra pushes to deliver 82 per cent renewables in the electricity system by 2030.
Mr Janetzki has privately raised questions with his state and federal counterparts over the price of energy needed for data centres to be economically viable in Australia, and wants to see advice from national regulators and rule-makers due later this year before proceeding with an uncosted plan.
Queensland also views the current proposal to impose specific requirements and costs on developers to invest in extra renewable generation and back-up, without considering alternate supply options such as gas, as potentially setting the scene for a costly underwriting scheme.
The Queensland government has withdrawn legislated targets requiring Queensland to source 70 per cent of its electricity from renewables by 2032, and 80 per cent by 2035.
It argued the benchmarks were unrealistic, rigid and risked pushing up power prices for households and businesses if left unchallenged. The policy is likely to keep coal power stations running until 2049.
Mr Bowen has bet that Australia’s booming data-centre industry can reverse the slower-than-expected rollout of wind farms amid fears a slump in financing projects will result in Labor failing to hit its 2030 renewables target.
The renewable decree has sparked caution over whether Australia’s electricity grid has sufficient capacity to deliver on the sprawling pipeline of facilities.
The Business Council of Australia has already pushed back, saying gas must be part of the energy mix and warning technology mandates could lead to higher costs and infrastructure bottlenecks.
It marks a second stoush between Queensland and the federal government on energy policy.
In May, the Queensland government demanded detailed information on the national domestic gas reservation scheme from federal Energy Minister Chris Bowen, amid fears the state faces a financial hit from lower LNG export royalties.
Earlier in June, Mr Ayres hinted Queensland may fold in its opposition to data centres underwriting new renewable power supply before they start operations.
“There is almost unanimous agreement, and I expect the remaining jurisdiction to lift here,” Mr Ayres said on June 11. “There is a real common view amongst the states that they don’t want to see a race to the bottom on data centre investments.”
The rush to install major data centres has led to both project, water and electricity pipelines being filled to capacity as dozens of developers jostle to feed a boom in artificial intelligence.
Westpac estimates Australia’s data centre investment pipeline will exceed $155bn with the total number of projects rivalling the size of the mining investment boom.
However, demands on the power grid have left policymakers and system planners the task of ensuring a surge in electricity use can be handled amid a fast-paced transition away from coal to renewables.
Australia’s largest electricity transmission company, Transgrid, warned that electricity capacity is “largely exhausted” at the epicentre of the investment boom, western Sydney, with developers urged to consider shifting to the regions to ease pressure on urban power grids.
Financial commitments to onshore wind-powered generation have fallen at a delicate time for federal and state leaders, who have staked taxpayer funds on delivering a fast transition to green energy before ageing coal-fired power stations reach their end of life.
Electricity consumption by data centres is forecast to reach about 34 terawatt hours by 2050, making AI one of Australia’s largest electricity-consuming industries.