Qantas hack underscores our woeful data storage game
In the world ahead, companies are going to need to store vast amounts of data to gain the advantages of enhancing computer power. Which means Australia has some clear choices.
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The deep significance of the Qantas data hack has not been fully explained to Australians.
And, in a strange way, the first utterances of new Rio Tinto chief executive Simon Trott underlined the lack of understanding of the Qantas implication.
In the world ahead, global and Australian companies are going to need to store vast amounts of data to gain the advantages of enhancing computer power.
The vast majority of Australian companies will want their data stored in Australia because, as the Qantas incident showed, there is probably a greater risk of leakages from overseas centres, and corporations that have most of their data overseas will be at risk to any new cable-cutting techniques that will emerge.
Major data centre operators are gearing for massive investment in local data storage. This will require unprecedented amounts of power.
The current Australian subsidy rate for data storage is not public, but all indications are that in rough terms the data storage operators are being subsidised in the vicinity of $1 subsidy for $1 renewable cost. The huge subsidy makes investment in Australian data storage globally competitive.
The amount of subsidies required for data storage will drain the nation because renewable energy systems are not compatible with the huge amounts of regular power required for the data storage business.
In due course the community demands for funds may cause the subsidies to be cut back, which will mean that companies will have to decide which data to store in Australia at high cost and which data to store overseas at low cost.
The Middle East is planning major investment in data centre power generation, driven by both gas and nuclear. In the US, subsidies are scarce, and the majors supply their base power via nuclear.
Rio Tinto’s CEO clearly didn’t link the Qantas overseas data leakage to the coming unprecedented demand for subsidised power to attract local data centres.
He put up his hand and requested more subsidised power to keep his aluminium plant going.
Most of the other aluminium plants in Australia will be asking for the same thing.
No one wants to shut aluminium plants, but with the high-cost renewable power generation boosted by the big backups that are required when there is no wind or sun, it is uneconomic to produce aluminium without power subsidies.
So now we have data centres and aluminium plants screaming for subsidies to overcome the high current cost of wind and solar.
As I explain below, China is optimistic about renewables.
And then of course there are the average families who depend on power subsidies to prevent a massive fall in living standards via a rise in the cost of living and possibly higher interest rates, longer term.
None of these issues are being faced by the nation, and as Chris Uhlmann explained in The Australian at the weekend that is exactly what happened in Germany and massive layoffs were required.
Germany may be lucky because it has a strong union movement which was able to link the cost of renewables with the unemployment being generated.
In Australia, we can only hope that ACTU boss Sally McManus has the skills of the Germans and is able to warn the government in very forceful terms of what is ahead.
Currently, on the ACTU agenda is higher GST and/or a carbon tax. The current situation is that money from any such taxes will be required for the massive subsidies.
A great many Australians passionately want a low-cost renewable system, even though other countries are moving the other way.
On present technology, we have to choose between power subsidies and living standards. But as the US is showing, there are other choices.
Here in Australia, we do not have an energy policy except the target to have nil emissions by 2050.
If Australia finds moving down computer enhancement and artificial intelligence routes via data centres too expensive, then we will fall behind the rest of the world in a massive way.
Australia has some clear choices.
One is to continue on the current path, and we know from Germany that inevitably means massive job layoffs.
And secondly, we can go nuclear, particularly with the new nuclear technologies. It is a good path, but the ALP government can’t do it.
That leaves us using our abundant gas to supplement renewables. This involves first linking and expanding the Bowen Basin gas to Gladstone and south.
We then form a massive energy highway to enable economic power generation and reliability. Later, Beetaloo gas joins it.
But gas is an interim solution. There needs to be better long-term answers. On this front, China’s thinking (and that of Japan) will delight many Australians.
Right now, the data centre boom means China is desperately short of power and is using every source of power it can find.
But some of China and Japan’s long-term power planners believe that emerging renewables technology is going to be superior to the new nuclear technologies.
Like China, we need to do whatever needs to be done to satisfy the surge in power demand.
Meanwhile, the data centre industry needs to use AI to devise less power-intensive data storage.
Originally published as Qantas hack underscores our woeful data storage game
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