Briefly:
Energy experts fear that the growing number of power-hungry data centers could make electricity more expensive.
Data centers could consume up to 8 percent of network demand by 2030.
What is expected next?
Data center operators are turning to renewables to power new centers.
Inside a vault of this data center is what looks like a hotel for computers.
It’s loud and hot. Each of these flashing server racks belongs to a business or an organization.
They house their critical infrastructure and data here because it’s so secure – with layers of security, including identity checks and fingerprint-only logins.
“Whether it’s networking or just general computing infrastructure,” David Dzienciol, NEXTDC’s chief customer and commercial officer, told The Business inside a data room.
“We run 14 data centers across the country, serving customers from the largest multinationals to Australia’s largest companies to small businesses.
“We rely on technology for everything, whether it’s our healthcare, banking or government services.
“There is no industry that is not dependent on data today.”
Growing demand
Australia is one of the top five data centers in the world.
There are 214 data centers spread across the country, according to the Australian Information Industry Association.
With the explosion of cloud computing and artificial intelligence, the industry is expected to grow exponentially.
“We believe we are at the beginning of a massive shift with AI,” Mr. Dzienciol said.
“We truly believe we are at the beginning of a shift in accelerated computing that could see demand grow over the next decade.”
Animals hungry for power
Data centers are already major power users in Australia.
They need significant amounts of electricity to run high-intensity computing and cooling systems.
Just one large data center can consume the same amount of energy needed to power 50,000 homes.
Morgan Stanley estimates that data centers currently use 5 percent (1,050 MW) of electricity on Australia’s electricity grid, and this is expected to increase to 8 percent (2,500 MW) by 2030.
Some estimates even suggest they could claim up to 15 percent of the grid’s power by then.
The straining network
As the nation scrambles to electrify, with households ditching gas appliances and more people driving electric vehicles, the grid is already under pressure from rising demand.
The Australian Energy Market Operator’s latest Integrated Systems Plan foresees total grid electricity consumption doubling by 2050.
Victoria Energy Policy Center director Bruce Mountain said Australia was ill-placed to meet this growing demand.
“We are now entering the difficult stages of the energy transition,” Professor Mountain told The Business.
“We have wind, solar and land, but we don’t have other clean energy, biomass or adequate amounts of hydro or nuclear.
“And that’s a disadvantage that we face that other countries don’t.”
Professor Mountain believes that although the data center sector is a vital service to Australia’s economy, the boom will make the energy transition more challenging.
“They make the transition challenge more difficult because not only do you have to replace coal-fired generation, you have to build new capacity to meet the growing demand,” he said.
“It’s not an insurmountable problem yet, but if demand continues to escalate at the rate it is, based on recent developments, I think it’s a problem.
More price pressure
Director of the Energy Program at the Grattan Institute, Tony Wood, agreed that the sector presents a unique challenge for the grid.
“That means putting pressure on our power grid. It also means putting pressure on our greenhouse gas emissions,” he said.
“If you add a lot more demand, and you don’t add more supply, then prices go up.
“I think governments can overcome this, but now is the time to do it.”
Energy Minister Chris Bowen said the first auction of the Capacity Investment Scheme, which will support 6GW of new energy, has received more than 40GW of project registrations, showing there is a strong pipeline of renewables ready to start.
Power retailer and generator Origin supplies power to around a third of all data centers in Australia.
The man responsible for these accounts said the company was looking at a number of options to meet their needs.
“Typically, we will look at solutions like distributed generation, so on-site wind or solar, storage solutions and back-up generation, and using power from the grid as well,” James Magill, head of Origin Zero, told The Business .
“Our clients, with their forecasts, will vary somewhat, but typically, these growth forecasts can be between about 10 and 30 percent per year.”
Mr. Magill said that to meet these energy demands, companies can be strategic about where they build data centers.
“Some of the sites may be more regional and that may match some of the new renewable generation.”
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