A new report from Greenpeace Australia has warned that the rapid expansion of AI data centres across Australia is set to slow the country’s renewable energy transition rather than accelerate it.
Published by Greenpeace Australia and independent climate analyst, Ketan Joshi, the ‘Energy Vampires: the AI data centres draining Australia’ report argues that data centres are adding large new loads to the grid without backing them with new renewable energy generation, effectively drawing on clean energy already being built for other consumers.
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The report concludes that no operator has adequately analysed to prove its claim of driving Australia’s renewable energy growth, and that claims of doing so through “additional” power purchase agreements (PPAs) are unsubstantiated.
Renewable energy certificates issued by some players have also been assessed as unlikely to reflect new supply added to the grid.
The Greenpeace report warns that, without enforceable requirements, the sector’s growth is more likely to lean on gas than on solar and wind.
Modelling by the Clean Energy Finance Corporation (CEFC) found that without additional renewable energy generation and storage, data centre growth could push wholesale electricity prices up by 26% in New South Wales (NSW) and 23% in Victoria by 2035, with the primary driver being increased reliance on gas peaking generation.
The report identifies specific projects that illustrate that risk. In New South Wales, Cloud Carrier’s proposed gas-fired power project to supply its Southern Highlands Data Centre would, if approved, wipe out NSW’s entire projected 2028 emissions cuts.
It is worth noting that several tech giants are looking to renewables to supply these facilities.
For instance, Microsoft penned a 15-year power purchase agreement with developer Fotowatio Renewable Ventures (FRV) Australia for a 300MW solar PV plant in NSW, intended to power Microsoft-owned data centres in the state.
Amazon also confirmed last year an AU$20 billion (US$14.34 billion) funding commitment to expand data centre infrastructure across Australia by 2029, announced alongside Prime Minister Anthony Albanese.
However, the Greenpeace report argues these arrangements fall short of the additionality standard needed to ensure data centre growth does not crowd out renewables earmarked for the broader transition.
Greenpeace concludes by calling on the federal government to immediately pause construction and approval of new facilities until enforceable safeguards are in place.
Joe Rafalowicz, head of climate and energy at Greenpeace Australia Pacific, said Australia is “completely unprepared for the magnitude of impacts” of the data centre rollout, with projects advancing at a “feverish pace” under conditions of “extreme lack of scrutiny.”
Regulatory response and market outlook
The integration of renewable energy generation, such as solar PV, and battery storage systems into data centre infrastructure also creates opportunities for these assets to participate in wholesale electricity markets during periods when capacity is not required for facility operations.
This could potentially improve investment economics while providing grid flexibility services.
However, readers of PV Tech will be aware that concerns are mounting in Australia around data centre developers not contributing adequately to grid infrastructure costs, with industry voices warning that social backlash is inevitable if facilities are perceived as freeloading on Australia’s clean energy transition.
To help address this, the Australian Energy Market Commission (AEMC) has started developing regulatory frameworks to accommodate what it terms “inverted baseloads”, defined as large, constant electricity consumers like data centres.
As reported in March, draft access standards released by the AEMC propose different requirements based on facility size thresholds at 30MW and 100MW, reflecting the challenge of integrating substantial new baseload demand into a grid increasingly reliant on variable renewable energy.
One solution could be battery energy storage. Battery storage is increasingly recognised as essential infrastructure for data centre operations, addressing three primary use cases according to Fluence chief growth officer Jeff Monday, who spoke exclusively to ESN Premium at the Energy Storage Summit Australia 2026 in March.
The International Energy Agency (IEA) projects that global electricity demand from data centres will more than double by 2030 to exceed 945TWh annually, driven substantially by AI-optimised facilities where demand is expected to more than quadruple over the same period.
