What's the truth?

Well, Michael, most data centres we have in Australia at the moment are running critical services, whether that's air traffic control, services, all of those things run through a data center.

And you're right, they need to be, we call it 99.59, so 9999% of the time.

That's the contractual agreement you have with customers, and it's really essential.

Now, there are starting to be different types of data centers running AI workloads, and some of those can be powered down.

But there's another point here that we need to talk about, which is where that onus or obligation sits.

And there's different types of data centres.

What's the sales pitch for these things?

But how do you view this in the longer term, bigger ambitions that Australia says that it has?

We have always said where government policy, energy availability and speed to market line up is where the investment will flow.

They're the things that investors, developers and customers are looking to.

And so our calls to government is we need to make sure, and this is not unique to Australia, every country is grappling with energy, energy transition, the energy required for the digital economy.

We haven't invested in energy transmission since the 1960s.

We're playing catch up to that because suddenly we've got this new requirement that has been underestimated.

Government policy is Australia is perhaps disadvantaged to some markets because we have a federated system.

Why are we moving so fast?

Now, are you supposed to have like your own... solar farm or wind farm or a combination of the two next to the data centre? Or do you buy 120 units of renewable power from a generator, only use 100 and give the other 20 into the grid or what?

Well, I think it's the latter.

Data centre operators and their customers already are underwriting renewable energy projects to put that energy into the grid.

They are great off-takers of renewable energy.

They work 24-7.

They work on weekends and public holidays when it's sunny and there's extra solar that makes the grid unstable.

So data centre operators are already doing that.

Is that true? Is it possible that they become technologically obsolete in the next decade or so?

Is that workable?

Well data centres are already restricted to being built on industrial land.

Now if you've ever looked at a map of how we zone land in Melbourne's metropolitan areas, there's little pockets of industrial land and pockets of residential land and pockets of transport land, commercial use.

So we have this zoning system.

Data centres can only be built on industrial land.

Sometimes industrial land borders on, shares a boundary with residential land.

And that's where these new rules that perhaps surprised us overnight say there'll be a mandatory 150 metre setback from any data centre that wants to be built near a house.

Is that true? Is it possible that they become technologically obsolete in the next decade or so?

What can you tell me about water fees, if there are any?

Yes, so currently data centres use 0.04% of Australia's water.

That's around 1% of Sydney's water.

Water is used for cooling.

So when I talked about the hard drive that sat on your desk with the fan that cooled things down, compute creates heat.

If you're using your mobile phone a lot, it produces heat.

So we use water in the cooling systems to... to reject that heat out of a data centre so that the equipment keeps working.

causing the data centre industry any concern?

When you talk about Australia becoming an exporter of computing power what does that actually look like? What are we selling to the rest of the world that they can't get from their world?

Well, tokens are what we call the unit of intelligence or the unit created by artificial intelligence.

So we use energy and water and the chips to put data in.

And what comes out is what we call tokens.

Now, a lot of the services that data centres run are things we use every day, whether it's emergency services, whether it's our banking systems.

And that is close to where people live and where people use that data.

But now with artificial intelligence, there's a whole lot of export opportunity through using that computer processing to generate these tokens and export that to the world.

And, like, is there a hesitancy about how the Australian government is setting up the economy to deal with AI data centres?

What are you seeing right now? There's obviously a lot of headlines which are FUD in many ways, but, you know, what are you seeing in terms of renewables or fossil fuels? Where are we at right now? Where do we need to be, and do we have what it takes to do this sustainably?

Yeah, look, I think one of the things that makes Australia such an attractive market for data center investment, why we're seeing customers want to put their workloads here in Australia, and that's what's driving the demand for increased capacity.

A lot of that is about Australia's renewable energy potential.

Most of the global tech companies have net zero ambitions, and that has been challenged by the rapid uptake of AI, the need to build more digital infrastructure.

So Australia becomes really attractive because of our renewable energy opportunity.

And so what we need to do is think about how we build our energy system, if you like, more holistically.

At the moment, there's a real focus on needing more generation, more generation, more generation, when we're sort of perhaps missing the firming, the transmission parts of that equation.

So what is it gonna take for that firming piece?

I mean, what are data centers used for?

So if you think about 20 years ago, we had hard drives that sat on our desk and that's where all the computer processing happened.

We then networked them and we put them into server rooms.

So you might have just had a monitor on your desk, but that hard drive now sat in the basement of the office building.

And then the next iteration of that was we took them out of the basements of office buildings and put them into a purpose-built facility, which is a data center.

And in doing that, there's lots of advantages, including we use 67% less energy.

They are far more secure.

Is that true?

Is that, is that true?

So just like any electrical equipment, if you think about your mobile phone, the compute, the processing does produce heat.

That's the by-product.

Um, so we need to keep, uh, the temperatures steady in, inside a data hall and in some, uh, data centers, not all, uh, water can be used as, as part of those cooling systems.

What we see is a variety of different systems.

Um, for the most of the year, particularly here in Melbourne, we can use just cool air from outside exchange, hot air pushed out and air cooling is sufficient.

But on those hot days when it's hotter outside, um, some operators will use a, a, a water and a cooling system.

Is there anything that, you know, residents should worry about living near a data center?

Can we start with the big picture? Just how big is this data centre boom in Australia so far and what are you expecting into the future?

Look, we have currently 162 operational data centres.

Now, if you compare that to the US, where comparisons are often made that the US has 5,400 data centres, we measure data centres in...

And electricity measurements, so megawatts or gigawatts in the US, that's 54 gigawatts of capacity.

In Australia, we're at 1.6 gigawatts.

So comparatively, we are small, but we're growing.

And I think that's where some of the concerns have been, is how do we make sure our energy system can cope with that growth? We're going through a period where we've also got the retirement of coal-fired power.

Given all of that, do AI data centres and the revolution we're about to witness, does that mean more expense for the taxpayer, do you think?

So what does the country's peak body for the data center sector make of the split? Belinda Dennett is the CEO of Data Centers Australia.

Some competition isn't unhealthy, but certainly we also support one set of laws for our members to, to comply with.

Ms. Dennett supports the Federal Government's plan for national standards, but says many of the sector's questions remain unanswered.

One of our concerns is a framework that sets obligations on data centers has to speed up the renewable supply and connections at the same time, and at the moment it seems to be just the obligations on data centers without the levers to speed up renewable supply.

Belinda Dennett is the CEO of Data Centres Australia, the peak representative body.

Data centers are built in industrial zoned land.

A- and so the majority of them take the view that we should look like everything else around us, which is a box and a warehouse.

And, you know, a lot of that comes from data centers being critical infrastructure, highly secure facilities.

You would've seen in the, the, the Middle East war that data centers were targeted.

So there has been this view from a security perspective, we, we, we don't wanna be branded and visible and people to know that your most sensitive, secure government data might be [laughs] held here within this facility.

So that's sort of where that came from.

I mean, I'm assuming that they need to be, to be big, but I'm wondering: how do you judge how big a, a data center needs to be?

Can you explain why they need so much water?

Well, firstly, how much water do they use? It's 0.04% of Australia's water use.

That's around 2.3% of the water we use in manufacturing.

So it's actually quite modest.

Data centres, the electrical equipment, the servers and the chips produce heat as a byproduct.

When you think about using your mobile phone, if you're using it a lot, it It gets warm, so that heat is a byproduct of the processing.

We need to eject that heat out of the data centre to make sure it stays at a stable operating temperature.

Is that true? And if so, why is that the case? Data centres

What is the connection between data centres and AI? How does it power AI? So AI is a

new type of processing, of data processing.

It's done inside a data centre.

Data centres are being designed somewhat differently.

The chips are different.

In terms of the processing power, they do use more energy because the processing is far more complicated than what it's been in traditional sort of one-to-one services.

And so we are building now purpose-built facilities for AI.

Why would Australia be keen to embrace data centres?

Data Centres Australia CEO Belinda Dennett says there's a lot of misinformation around data centers derailing the renewable energy transition.

This is one of the most forward-leaning industries on supporting the energy transition.

She says data centers are already voluntarily underwriting renewable energy projects that otherwise would not have been built.

So we think the data center industry is actually helping us build a more resilient and a cleaner energy grid for the future.

So this will rely upon keeping coal-fired power in the mix for longer, won't it? Is that logic?

Well, if I can just correct a couple of those things.

So 70% offsetting energy use with renewable energy is what's happening today.

Our members would like to get that to 100%, but there are some challenges in ensuring we have viable renewable energy projects that can be underwritten by operators and their customers that match the timeframe.

Data centres can be built very quickly.

Wind and solar projects tend to take longer.

So there's a time matching challenge around that.

Is the sector open to that?

So tell me, in global terms, where do you put Australia in terms of our rollout of these data centers? Are we ahead of the curve? Are we behind the curve? Where would you say we are right now?

Well, look, certainly the US is, is the, the major market.

You know, they have, uh, 5,400 data centers and, and 53.7 gigawatts of capacity.

When you compare that to Australia, we have around 166 data centers and, um, [smacks lips] 1.5 gigawatts of capacity.

So, so it's a much, much smaller scale.

Um, but what we're seeing is, is a, um, increase, a fairly rapid increase in that capacity and certainly a lot of customer demand.

Australia is a very attractive market for data centers.

But it's also one other thing that's just strategically important that Australia build these data centers so that we can ensure that the data is held in our nation, that our data, our most secure data, and even our personal data, is not held somewhere else.

Uh, it said that data centers could end up using thirteen percent of the nation's energy by, by twenty fourteen.What do you say to, to Greenpeace? An- another environmentalist, another people who raise these, these environmental concerns about data centers.

So they-- W-we're really keen that we start with the facts.

There's a lot of could'ves, might, should'ves, perhaps could.

Um, w-we wanna talk about the facts, and, and we also wanna sh- highlight the difference.

A lot of people are seeing what's happening in the US.

The scale of the build-out in Australia is significantly smaller.

In the US, there's five thousand four hundred data centers representing fifty-four gigawatts of capacity.

You know, it's not entirely clean, is it? These, these data centers.

What do you say to, to Greenpeace and, and other environmentalists and other people who raise these, these environmental concerns about data centers?

So it...

W- we're really keen that we start with the facts.

There's a lot of could'ves, might, should'ves, perhaps could.

Um, w- we wanna talk about the facts and, and we also want to sh- highlight the difference.

A lot of people are seeing what's happening in the US.

The scale of the build-out in Australia is significantly smaller.

...these, these data centers

Mm-hmm.

So cooling needs to be, um, used.

There are different ways of using cooling, and some of those use water.

So evaporative cooling is one that will use water.

But we need to put that in context.

So water use for data centers in Australia is 0.04% of Australia's water use.

By contrast, it is 2.3% of the amount of water we use in manufacturing.

So bringing it back to the Microsoft AI tour and the fact that they're spending 25 billion, and we talked about NextDC, another one of the big tech players, what does it say about Australia when you're getting this sort of investment?