Queensland and Northern Territory reject federal push for AI datacentres to use renewable energy

Queensland and the Northern Territory (NT) have rejected the federal government's proposals to require AI datacentres to use renewable power, dismissing Prime Minister Anthony Albanese's plans as "underdeveloped ideas that hand increased power to Canberra." The dispute comes as rating agency S&P Global warns that datacentre power consumption could rise five-fold by 2035, reaching 10% of Australia's total electricity use. The agency highlights a mismatch between datacentre delivery timelines (18–24 months) and renewable projects (3–5 years), which could lead to surging energy bills.

The federal Labor government says it will push ahead with plans to impose energy and water usage rules on datacentres and develop "nationally consistent" AI regulations, even without support from some states. A meeting of state and federal energy ministers on Tuesday discussed the government's expectations. Albanese has pledged a "legal obligation" for new datacentres to underwrite new power supply, pay grid connection costs, and "put at least as much energy into the grid as they take out."

In May, Queensland was the only state opposing a renewables mandate. This week the NT joined Queensland in rejecting further proposals. All other states agreed to nationally consistent rules, including underwriting new renewables and offsetting power use, while ensuring no price impact on consumers. Queensland treasurer and energy minister David Janetzki said the state supports only proposals delivering affordable, reliable, and sustainable power, but not ideas that increase Canberra's power at Queenslanders' expense.

Federal sources said the opposition from Queensland and NT would not derail Albanese's roadmap. Energy minister Chris Bowen will address the National Press Club next week, ahead of a national cabinet meeting in August and another energy ministers' summit in September. Federal powers over the Australian Energy Market Operator and the Australian Energy Market Commission could be used to mandate renewables for new datacentres.

S&P's report also cited estimates that datacentres could use 15% to 20% of Sydney's water by 2035. The agency warned of an "infrastructure and temporal mismatch" that could raise consumer prices. If renewable and storage infrastructure lags, the Clean Energy Finance Corp estimates wholesale prices could rise by 25% across states, with emissions increasing by 14%.