Australian power costs threaten data centre jobs exodus

Data centres are the cornerstones of the coming tech revolution. They need better power – and investment – to run than what Australia is currently providing.

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Australia has the wrong power generation system for the electricity-intensive, data-driven business systems sweeping the world.

The US will fire the data power generation starter’s gun this month in a race that will determine which countries will prosper in this new world.

Because we are heading in a different direction to other major developed countries, a vast number of Australian enterprises that need data storage will either have to pay high power prices for Australian data storage or go to the US, China, the Middle East or some other country that has low-cost, reliable power for data.

Australian companies forced to store essential data in remote countries will be taking huge risks, including a potential sabotage of our international cable.

In this new world, Australian technology investments and jobs will follow the availability of properly priced reliable data and go abroad. It’s a looming national disaster which has not been flagged.

The US understands the data boom will require countless billions of investment (most of it from the private sector) to enable an enormous increase in power generation in the next five years, hoping to beat China, which is also planning a similar power generation explosion. The Middle East, too, is on the starting blocks in this race.

What unites all three regions is they have concluded, on present technology, gas and nuclear will dominate the new power plants being planned.

The plants will normally operate outside the grid but will be able to supply the grid. With most of the costs met by the technology giants in the US private sector, the job of government will be to smooth the path and make sure energy is available. For example, in the US large data power areas are being set aside.

The long-term power generation technology potential of the emerging versions of nuclear will mean it is nuclear the world, including Asia-Pacific, will use to lower emissions. This has not been explained to Australians.

But, currently, gas is vital, which is why Middle Eastern capital wants to snap up Santos at a low price before politically motivated Australian institutions wake up.

Data centres are the business foundation for exploding cloud computing, advanced manufacturing, robotics, agriculture, retail, quantum technologies, cyber security, clean energy, biotechnologies, and other emerging high-performance computing activities, including AI.

All the Australian government’s critical infrastructure sectors will rely on data centres. And Australia need data centres to be close to most of those activities.

Like the US, Australia was slow to understand data and that data centres would be a cornerstone of a nation’s business future. But where the US is pulling out all stops to adapt, Australia is not.

Before the realisation of the future role of data was widespread, Australia decided to generate some 80 per cent of its power via renewables by 2030 and even higher percentages in later years.

The switch to renewables has come at the cost of the reliable power needed to assist the data boom. Picture: AP

Sadly, wind and solar do not suit data centres because, as Europe is finding, in hot weather solar’s effectiveness drops and often the wind does not blow.

In Australia transmission costs from remote solar and wind farms have exploded, which is set to trigger major power price rises. Data centres need large amounts of regular power and they cannot operate properly when power supplies fluctuate. If renewables are to be used, huge back-up power is required from gas or hydro. It’s too expensive.

Australian federal and state governments need to understand remote solar and wind does not provide the reliability and cost necessary for globally competitive data centres to enable a globally competitive industrial base. Without this base Australia will be a much poorer nation, unable to afford employment-creating opportunities.

Australia needs to set aside power generation/data centre areas and encourage the consortiums to erect power stations. Most power investors will be happy to use gas to generate power, but will want the option to go nuclear later.

The current government will hate this idea because it will destroy its carbon emissions targets and is very similar to what the Coalition proposed at the last election.

This must be the main issue at the productivity summit.

Last month I wrote Australia needed to face the fact that the 2025 Productivity Conference will be dominated by ACTU secretary Sally McManus and her union team, just as happened three years ago.

There is no point trying to make significant changes to the industrial relations legislation. Instead, she should be recognised as being uniquely placed to save the nation from a productivity disaster linked to looming power and data crises, and in the process create and save vast numbers of jobs and improve livelihoods.

A decade or so ago, for the very best reasons in the nation, both sides of politics embarked on a renewable energy campaign. The productivity summit must recognise what has happened and change course.

For the moment let’s put nuclear aside. We can’t waste time on such a debate. That’s for later. We need gas and we need it urgently. Victoria has great gas deposits, but the government does not understand what is happening around it.

Before the election I suggested we fast-track Beetaloo. It’s now more likely for the longer term. Moreover, the Bowen Basin has proven reserves and can be linked to the national pipeline network.

The Santos gas in NSW might be enlisted and there will be a big global waiting list for power generation plants. We need to move quickly.

There will be outrage because it means we will not meet our emissions targets until we enter the nuclear age.

Australia is a country that was able to live well on low energy costs. Renewables are high-cost because of their limited life and the need for large-scale backups to provide reliability.

Power-hungry data centres have changed business rules, and unless we go with the change, we will lose our high-paying jobs, plus lower-paid labour.

A vast number of Australian enterprises will need to harness data technology to be economic and compete on the world stage.

The rest of the world is changing rapidly. We can’t be alone.