Australia’s opportunity to lead the AI infrastructure race
Australia’s global edge in AI will rely heavily on capitalising on our abundant clean energy resources to power the data centres needed to support AI-ready data centres.
Australia stands at a crossroads in the race to become an AI leader. With a strong international reputation, an abundance of energy resources, and close ties to Asia, we are uniquely positioned to emerge as a global hub for AI infrastructure, with all the economic benefits that entails.
But this window of opportunity won’t remain open forever. Other nations in our region, such as South Korea and Singapore, began executing national AI strategies as early as 2019. India, too, is riding this digital wave. Poised to become one of the fastest-growing leaders in AI, India’s AI market is expected to reach $US20bn-$US22bn by 2027.
If we don’t act swiftly, we risk falling behind in the development of an industry that will define the next century.
This urgency was the subject of passionate discussion at a panel at the AI Factory of the Future Deloitte Asia Pacific TMT Summit, recently held in Sydney. A key theme was that Australia’s global edge in AI will rely heavily on capitalising on our abundant clean energy resources to power the data centres needed to support AI-ready data centres.
As panellist Craig Scroggie, CEO and managing director of NextDC – Australia’s largest listed data centre operator – noted after the fact: “AI is scaling faster than traditional infrastructure models can keep up. Nations that can align policy, capital and capability – and deliver at speed – will lead this industrial shift. What’s needed now is urgency, co-ordination and execution.”
AI-ready data centres – especially those powering generative AI – require unprecedented amounts of electricity and cooling. These demands on power and utilities infrastructure are straining both grid capacity and sustainability goals. Our modelling suggests global data centre electricity consumption could nearly double to 1065TWh by 2030, accounting for 4 per cent of global usage – and potentially 8 per cent of Australia’s energy consumption.
The challenge is compounded by our computing infrastructure and the technical reality that newer-generation CPUs and GPUs have higher thermal density. Server racks are becoming denser to meet growing AI workloads, but this trend also increases water demand. On current trajectories, AI data centres could consume up to 1.7 trillion gallons of freshwater globally by 2027.
Policy clarity is urgently needed. Industry and energy policymakers must co-ordinate and commit to a future energy mix that supports sovereign AI capability while also adhering to our net zero commitments.
We must also be able to ensure robust connectivity through high-capacity domestic and international network backhaul.
But infrastructure is only one piece of the puzzle. Australia must also urgently address its emerging tech skills and talent gap, which should also be a focus of policymaker and industry collaboration. According to the Australian Computer Society’s 2024 Digital Pulse report, Australia will need 52,000 new tech workers annually through to 2030 just to meet demand.
Once we have skills and energy sorted, we need to ensure we have access to the materials needed to build out the raw computing capacity that enables the development of AI models. Specifically, this requires access to GPUs (graphics processing units), the powerful computer chips that are essential for training and running complex machine learning models and deep learning networks.
Even though the proposed US’s “AI Diffusion” rules have not been enacted, it highlights the importance of trade relations and diplomacy to ensure Australia has continued to get unrestricted access to these crucial inputs.
Our focus, therefore, should be both working to bolster our sovereign AI capabilities, while capitalising on the opportunity to become a regional AI hub that exports our computing capacity to our neighbours in the Asia-Pacific region.
Many of our neighbours lack the real estate to build data centres, the skilled workforce, or the reliable access to power needed to support AI capabilities. This presents a real opportunity for us to step in and offer our AI capacity to them. However, to make this possible, we’ll need to invest in infrastructure – such as subsea telecommunications cables – that can support the significant data flows involved.
It is not far-flung to suggest that AI could be Australia’s next great export industry, one that could underpin our continued economic prosperity in the century ahead. But to get it right, we have to focus on six key pillars – real estate, power & utilities infrastructure, connectivity and network infrastructure, computing infrastructure, talent and policy framework. All six are critical to build a conducive environment for boosting investments in AI and maximising the potential benefits to Australia.
Bec McConnochie is Deloitte Australia’s Industry & Sectors, Growth Ecosystem & Partnerships Lead Partner, and Peter Corbett is Deloitte Australia’s Telecommunications, Media and Technology Lead Partner.
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