ABERLE, Dr Nicholas, Director, Policy and Advocacy, Clean Energy Investor Group EDIS, Mr Tristan, Chief Executive Officer, Green Energy Markets KENNEDY, Mr Martin, General Manager, Market Operations and Grid, Clean Energy Council PRICE, Mr Connor, Senior Policy Officer, Clean Energy Investor Group UPSON, Mr Jonathan, Senior Analyst, Green Energy Markets CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to Senate committees has been provided to you. Do you each have your opening statements? We'll start with the Clean Energy Investor Group. Dr Aberle : Thank you, senators, for the opportunity to appear before the committee. This is obviously a very important conversation and inquiry. The Australian government has been very forward-leaning on addressing the rapid growth and investment into data centres as a result of developments in AI, and the Clean Energy Investor Group represents institutional investors in Australia's clean energy and storage. I just want to make a few quick points at the outset. Firstly, the rapid growth in data centres has the potential to be a driver of clean energy investment across Australia, which has slowed in the last few years. Data centres can fill a much-needed gap in the market when not a lot of power purchase agreements are available. Retailers and corporates aren't signing enough long-term contracts, and, without contracts, renewable energy projects are struggling to reach financial close. Our recently released Clean energy outlook survey report found that 92 per cent of clean energy investors believe that growing demand from data centres will have a positive impact on clean energy investment. From an energy perspective, the key risk from data centres is not load growth itself but demand growth that outpaces investment in new supply and network capacity, which would increase reliance on legacy generation and weaken the pace and credibility of the transition. This would look like higher power prices and higher emissions, and that's precisely why we need more renewable energy to be built rapidly. I'll leave it there. CHAIR: Great, thank you. Clean Energy Council. Mr Kennedy : Thank you to the committee for inviting the Clean Energy Council to appear today. As the national peak body for the renewables sector, we represent almost a thousand companies nationwide invested in the clean energy transition, with members including large-scale developers, constructors and installers, equipment manufacturers, transmission and distribution businesses, and data centres. Across the various analyses and forecasts we see on data centres is a recurring theme. Namely, they are likely to be big in both number and in electrical load. Whether they're a big opportunity or a big challenge is up to us. Whether they get built here, and position Australia as an exporter of AI services, or overseas, positioning us as an importer, is also up to us. While Australia is at the end of a long logistics chain for physical exports, the information superhighway does not face the same constraints. The opportunity is there to leverage our competitive advantages as a stable, secure democracy and a Five Eyes member state with abundant, cost-effective renewable energy and physical proximity to growth markets in Asia, to build AI related services into a material export industry. At the same time, building domestic capability in a strategic and growing technology has national security and productivity benefits as well. Our specific interest at the CEC is ensuring that Australia has sufficient supplies of secure sovereign energy using our abundant natural resources. Data centres present an opportunity to link new demand with new supply, bringing on more generation overall and protecting households from competing with these new load sources. The most material acceleration opportunity we see in our work with renewable developers is to expand the pool of bankable offtake capacity, which renewable projects need to secure financing and begin construction. As bankable offtake is precisely what data centres bring to the table and need themselves, the CEC views the opportunity of powering Australia's digital economy with firmed renewables, if done correctly, as a natural win-win and has focused its policy work and advocacy on doing just that. Thank you for your consideration, and we're open to questions. CHAIR: Thank you. Green Energy Markets. Mr Edis : Obviously, you're having this inquiry because you know that this is a serious issue, and we absolutely agree with the concerns that are there. To put some numbers on this, AEMO is forecasting that it's going to be 32 terawatt hours of electricity consumption by 2035. That would be equivalent to adding South Australia and the WA main grid to our grid, basically. CHAIR: By what timeframe? Mr Edis : By 2035. That's a huge amount of additional electricity. CHAIR: South Australia and— Mr Edis : And the WA main grid. That's what we're adding in the space of 10 years. So if we don't build the new renewables and batteries to match that load we're going to have serious problems when it comes to power prices and reliability. One of the other things that's important to keep in mind is that we're going to have a serious problem with the price and availability of gas as well, which a lot of people don't appreciate. To generate 32 terawatt hours from gas would require about 230 petajoules of gas. What's 230 petajoules? It's half of the total east coast gas demand. It's equal to the entire gas consumption of industrial manufacturers on the east coast. They're already complaining they don't have enough gas, and if we do this we're going to have a serious problem on our hands. The good news is that we actually have plenty of renewable energy projects and plenty of battery projects to be able to meet that demand. Our business maintains a database of all renewable energy projects in the development pipeline. We have 41,000 megawatts of wind and solar that have planning and development approvals in place. They would be able to generate 86 terawatt hours of electricity per annum compared to the data centres, which need 32. So we have the projects. We can solve this problem, and we can avoid a major problem with gas availability. The key thing is that, obviously, the government is saying the right things right now about needing new and additional renewable energy, batteries and firming to meet that data centre load. We've just got to follow through with that. The risks, for us, that people should be aware of are that, firstly, this obligation needs to bind on data centres essentially from March this year so that any data centre that was committed to construction after the government announced their expectations can't say they didn't know that this was something that they needed to do, so that needs to come in, and, secondly, we need to be careful of data centres claiming that they've met their obligation and they're all fine by buying renewable energy certificates from old projects that essentially could've been built many decades ago. That is not helping us build the new supply to meet this new demand. I'll leave it there. CHAIR: Obviously, people are quite concerned about what seems to be this huge expansion of demand versus how that's going to be met. I want to drill into the point that you've just made here, Mr Edis, about the renewable energy certificates not being sufficient on their own. Can you unpack that a bit and why that is really crucial? Mr Edis : At the moment we have a certificate scheme. It's a good thing we're certifying, and we've got some way of tracing ownership of whoever has supported the renewables project. The government's proposal to use what they're calling REGOs is a good idea. The issue is that we need to put a line in the sand. I would say March this year effectively qualifies for a new REGO that a data centre can use. Anything older than that is essentially not helping support that extra electricity consumption. Therefore, we need to make sure we contain power price rises and emissions. It's easily manageable. We just need to define that. We've done that before in a range of different schemes, including the original renewable energy target, which had a definition date of old versus new. With the Capacity Investment Scheme, we've seen which projects qualify and which don't. It's the same with the New South Wales Energy Infrastructure Roadmap. This is something that's very straightforward. You put a line in the sand and say, 'Any project from this date onwards qualifies as new.' CHAIR: I'm not sure who can best answer this. There are some competing challenges: there are places where these hyperscale centres are being built, and that's about what capacity there is to support them other than just plugging into the existing grid; there is the need for new supply to come online to meet this demand; there are the arguments around gases around firming or backup; and then we've got so many facilities that are planned or that already exist that have diesel backup generators. What I'm trying to understand is whether, in anything that the government has put forward so far, you envisage that all three forms of that energy supply—grid, gas and diesel—are going to be needed. Mr Kennedy : I think the grid infrastructure would certainly be needed. There is work under development by the AEMC in New South Wales with NEM-wide application to ensure that the cost of any network augmentations is borne by the data centres and is not distributed to other customers. Similarly, the additionality requirements on the renewable side are clear and necessary. Likewise, there is additionality as it relates to the firming capacity—which switches on when the sun is not shining, when the wind's not blowing and the battery's flat—and is that final ultimate backstop that keeps it online. I think there's a need for additionality signals there, which the AEMC has put some thinking into, linked to the retailer reliability structure. CHAIR: Are you suggesting that final reliability element could be either gas or diesel? Mr Kennedy : The New South Wales policy specifically excludes diesel. I think at the AEMC level it's still an open question. I'll probably leave it at that. CHAIR: Has anyone got anything else to add to that? Dr Aberle : I'll add one element to that. You mentioned the transmission side of the equation, and I'd say that there are two different ways where that's really important. The first is augmentations on existing lines that enable new capacity to be sited in those parts of the grid. Another is that it really highlights the need for new transmission lines to be built so that we can actually have new renewable generation built so that we can match the supply with the demand. There are a range of transmission lines under development around the country. Those are critical for unlocking the areas of the country that have not historically hosted energy generation but are critical for the energy generation that we need to achieve net zero targets and to accommodate large new demand from data centres. CHAIR: Am I right to interpret what you're saying as being that the location of these hyperscale centres is really important—both strategically to harness opportunity but also in order to have them powered properly? They shouldn't necessarily be down the road here, 15 metres away from somebody's home; they should be in areas where you can maximise the opportunity of new transmission and new generation side by side. Dr Aberle : I have spent a lot of time looking at the siting issues for renewable energy generation and storage projects. I have not spent a lot of time looking at the siting complexity for data centres, so I can't comment on that specifically. I would say that the general thrust is correct. There is a complex set of factors that need to be considered for what the right locations are. The energy supply or the grid availability is the energy side of that equation. We can comment on that, but a lot of the other issues are outside our remit. Mr Kennedy : There's an analogue that's useful to the renewable space: the location of the renewable projects is determined by the renewable developers operating within a given planning framework. It feels as though the same approach applies here, with the right framework in place and the people whose job it is to develop these assets deciding where to put it, based on that framework. The important additional piece to that, which we've advocated for, is sufficient information availability to enable them to make an optimum decision. For instance, they need to know that this is an environmentally sensitive area that shouldn't have things sited in it, or this is a space in the network where there's actually some spare capacity and an additional load might help reduce prices for everyone. If that sort of information is made available, and the right framework is wrapped around it, then our view would be that that empowers the data centre operators to make the best siting decisions. CHAIR: In which case you really do need a proper national framework and an inventory of what's already available and what the needs are. One of our witnesses yesterday said we were going about this the wrong way. We've got these big, mostly US data companies coming in and saying, 'We want to set up shop in Australia.' Then everyone here says, 'Where? How do we do this? Oh, you want to go here?' rather than saying, 'This is the energy capacity Australia can afford, and these are the places that it would work.' And then we'd let data companies bid for who's going to give the best community benefit in return. It seems to me that that's what's expected of the renewable energy industry. Why isn't it expected of the data centre industry? Dr Aberle : It's an interesting point. It's fair to say that, for renewable energy developments, the siting considerations and the planning and environment requirements have evolved a lot over the last 10 years—and they continue to evolve. The best time to fix everything was 10 years ago, but the next best time is now. We're seeing many state governments working on their own guidelines or plans around data centres. Obviously, there are the national standards that the federal government is working on. Those are the vehicles through which we try to resolve those types of challenges. CHAIR: Obviously, the federal government started off by saying that all of these facilities needed to be renewables powered, and they needed to match their own demand. It now seems as though it's not all renewables powered. We've got carve-outs for Queensland and the NT. Are you concerned that that skews how this will actually roll out and work across the country? Mr Kennedy : I can comment very quickly. When we look at AEMO's Integrated System Plan and CSIRO's GenCost report, what comes through loud and clear, year after year, is that the cheapest form of new electricity is firmed renewables. Senator HENDERSON: Mr Kennedy, that's just not the case. That's based on the government's policies. Mr Kennedy : The GenCost is not really fixed to that. Senator HENDERSON: No. It's based on the government's current policy framework— Mr Kennedy : For the ISP, that's correct. Senator HENDERSON: which excludes coal altogether. Sorry, Chair, I know I'm interrupting, but I just— CHAIR: You'll have your time with Mr Kennedy if you— Mr Kennedy : I think it's a valid criticism of the ISP framework, but that is not the way to characterise the GenCost report. Senator HENDERSON: Well, the framework— Mr Kennedy : That is agnostic of policy. CHAIR: Can I get back to the question that I asked? Senator HENDERSON: It's only about the government's policy. Mr Kennedy : Yes. CHAIR: Senator Henderson, I really want to get some answers to the questions I've asked, and then we'll come to you. Sorry, Mr Kennedy. Mr Kennedy : Where were we? CHAIR: You said firmed renewables is the cheapest. Mr Kennedy : Yes. CHAIR: What I was asking was: what impact do the carve-outs for Queensland and the NT have? Mr Kennedy : If you take the view that data centre operators are seeking to get cost-effective electricity, then, given a choice between procuring that through gas—which typically sits at the very top of the merit order as one of the most expensive ways to make electricity in Australia—versus firmed renewables, which the evidence suggests is much cheaper, they will naturally pick that option. Mr Edis : I'd just make a comment on the circumstances in Queensland. They've already got 1.4 gigawatts according to this Dalby project. That would quickly chew up the spare capacity, and I imagine Crisafulli would love to get several more of those. That's going to chew up all the available, latent capacity sitting within their existing system. If you don't build new power plants—and we could argue about whether it's coal or renewables or gas—you're going to end up with power prices going through the roof in Queensland. A few more of those data centres—all their spare capacity is gone. They're going to need to bring on the gas fired generators, and the price will skyrocket. There is a mistaken belief amongst a range of people that state owned power companies are benign, benevolent institutions. Stanwell was pulled up on multiple occasions by the Australian Energy Regulator for manipulating the market several years ago. Snowy Hydro's had the same thing. I can tell you Stanwell will walk over to a data centre, offer them a wonderful price and with the other hand jack up prices when there is short supply and gas is the marginal generator. It'll look great for the data centre. It won't look particularly good for other Queensland consumers. It will look to everyone like cheap power to the data centre, but to everyone else it's going to be expensive because it then gives Stanwell pricing power, which in the past they've chosen to execute. That's not saying they're evil. That's the way they're incentivised. CHAIR: That's the market. Mr Edis : It's the way every generator, including the state owned ones, is incentivised. Their management is incentivised to maximise profit. CHAIR: What about the Northern Territory and expanding the Beetaloo basin to power these. The size of the data centres they're proposing in the Northern Territory is several times bigger than that of those in the Melbourne CBD. What impact is that going to have? Mr Edis : I don't know whether it's real or it's not. CHAIR: So you think this could all be a bit of spiv work? Mr Edis : Possibly. You've got some companies. Some of them are not that mature. Some are very mature in the Beetaloo basin. Some are keen to raise money off the stock exchange, and they've got to come up with a plausible growth plan—well, some kind of growth plan—and hopefully find some investors that think it's plausible. I'm not entirely sure that it's ever going to eventuate. I think those guys have still got to prove up their gas resource first. There are a number of question marks about whether that will ever reach reality. Dr Aberle : I'll just add one short part to this conversation. I think one of the big reasons that data centres are looking at Australia as a market for them to develop in is our renewable energy potential. I think data centre developers are aware of what's happening in the world. They can probably see that in five, 10 or however many years time that having facilities that are powered by fossil fuels will no longer be a particularly popular approach. Therefore, Australia's attraction as a venue is that we have the potential to power these facilities with renewables. I don't think we should take it on faith that they will do that, which is why things like the national standards that are being developed are really critical and the details of those standards are really critical. It can't be left to chance. Things like a certificate based system that guarantees that the electricity is coming from renewables are important, but from a financing, investment and bankability perspective having a power purchase agreement between the data centre and the renewable energy development is a critical component of those standards. CHAIR: To this point—first of all, I think there is an expectation now that, if data centres are going to be built here, they should be powered by renewable energy and that the data centres should fund that. They shouldn't be able to just plug into the grid and assume that they can just get bumped up the list. A number of witnesses have proposed to us—and we have quite a few submissions to this inquiry saying this—that just being prepared to create new generation that matches demand is not enough and that, actually, you've got these big US companies coming here precisely for the reason that there's a lot of space and a lot of capacity for cheaper power if it's built as firmed renewables. What should the industry be expected to do to deliver more than just what they need and actually contribute extra capacity—150 per cent or whatever the token may be? Is that something that you think would help? Mr Upson : I think this brings up a very interesting point. There's been a lot of focus on these companies bringing their own renewables. Well, to be honest, it's not going to match their load. Obviously, a solar farm is not going to match the data load at night. When it's not windy, it's not matched either. It is very important—and it is government policy; they've said it many times. These data centres must bring new firming as well as new renewables. They need to bring new dispatchable capacity that comes online at the same time as the data centre or very shortly thereafter. Otherwise, as the opponents of renewable energy always points out, when the wind's not blowing and the sun's not shining, you're going to have higher prices. The good news is that there are just scores of battery development projects in every state, and they take about the same time to build as a data centre. There hasn't been much focus on this, but, besides contracting with a wind or solar farm, they also need to contract with new dispatchable capacity, and it needs to happen very quickly. Battery projects are very economical. There are a lot of them around. It won't be a problem for them to write a tolling agreement, which is like a power purchase agreement for these batteries, or they could buy a project and build it themselves. But this is critical because, if you don't bring that new dispatchable capacity along, then you will have an adverse impact on wholesale electricity prices. Mr Kennedy : The point that I'd add to that, quickly—just to your question—is that it's necessary for projects, to achieve financial close, to have a certain percentage of their revenue from a bankable source, like an offtake, but usually they don't contract all of their revenue. You would expect that, for instance, the data centre might contract 80 per cent of the capacity of a particular project; the whole project still gets built. That's where that benefit for the broader system comes in. The other point that I'd make, building on what Dr Aberle said before, is that gas, where it's available—on the east coast, at least—tends to be priced at export parity. What we can clearly see—and the data is there in every AEMO quarterly dynamics report—is that's the most expensive way to make electricity. Mr Edis : I think the one thing, though, to add is that speed is clearly the most important thing for data centre operators. The issue is—someone says, 'Well, if renewables are the cheapest, of course they're going to want to buy that, aren't they?' What they want is to build the thing as fast as they can. Building new projects, contracting with them—it takes time. It involves detailed negotiations. They have to understand the nature of that project and its viability. Those sorts of things are things that, perhaps, they'll worry about later, and that's why we need to have government applying mandatory standards on those data centres—to counter the fact that the first thing that they're most worried about is speed and they'll worry about the consequences later. This is a way to make sure: 'No, you guys are going to also need to be concerned about ensuring that your power supply needs are taken care of. The fact that might take a little bit of extra time is not really something that the community should be conceding. I think we can achieve both. We can enable that speed for them, but they need to face obligations as well. It's not just going to naturally work itself out because they're prioritising speed over a range of other criteria. CHAIR: I guess that comes back to your point about making sure these rules are retrospective to March 2026 at least. Mr Kennedy : Yes. CHAIR: What about the construction constraints on all of this? We've heard quite a bit of concern about the amount of sparkies that are required to develop these mega data centres versus what's required for the actual renewable rollout for everyday people, for housing. This is about governments needing to make priorities in terms of who gets served first. Dr Aberle : It's a challenge. I don't know that we have the answer to it, but that's absolutely a challenge. Mr Kennedy : I think it points to a workforce development opportunity, too, in terms of the sorts of programs that are supported and prioritised at the TAFE and university level. Also, it's worth contrasting it with some of the concern we hear about job losses from fossil fuel generators that are shutting down—jobs potentially impacted through the AI aspects of data centre development. But we need to be equally mindful of exactly this challenge on the other side of the ledger, which is that there are a lot of jobs that we need to fill to build these things. CHAIR: Senator Henderson. Senator HENDERSON: As you might have gleaned, I take a very different view. This morning, we heard from communities about the impact that data centres are having on their community, including the noise that they pose and how they are encroaching. Some are built within metres of their homes. I respectfully put to you that this is some of the most self-serving evidence, because the renewable industry has treated regional communities, including those in Victoria, with contempt by building wind projects and solar projects without any regard for the impact on local communities. I would put to you that data centres should not become a financing mechanism for the renewable energy industry, dressed up as energy policy. You've got— Mr Edis : [Inaudible] want electricity prices to go away. Senator HENDERSON: I am very happy for you to respond, but can I respectfully say that you're not in any position to understand the impact the data centres have on local communities, including here in Yarraville, because of the way that your industry has treated regional communities, including those across regional Victoria. Dr Aberle : Can I push back on that in a couple of different ways? Senator HENDERSON: Of course. Dr Aberle : I appreciate that not everyone likes renewable energy. That's fine. I don't think it's at all fair to say that the renewable energy industry has built projects without any regard to communities. Renewable energy development is a very detailed, long, sophisticated process. It hinges on the consent of willing landholders, who agree to sign a lease with the developer to put solar panels or wind turbines on their land. None of this is compulsory. This is all done with the consent of the landholder. These projects have to go through very extensive planning assessments, environmental assessments— Senator HENDERSON: Dr Aberle, I'm sorry to cut in here. I don't want you to mischaracterise my position. I'm not saying I'm opposed to renewable energy. Dr Aberle : Sorry, I wasn't saying that you specifically were opposed to it. I said people in communities speak about communities. Senator HENDERSON: If you look at what ACCIONA did in Waubra, where they built a turbine 300m from someone's house; if you look at the fact that the Victorian government has overturned any rights of appeal in this state when turbines have such a massive impact on individuals and regional communities—I'm simply pointing out that I think it's pretty hypocritical for you to come here and give us—or, certainly, me—a lecture about the renewable industry when we have seen firsthand how the renewable industry in this country has treated regional communities. Mr Edis : There's a fundamental issue here. Would you prefer data centres were not built? Senator HENDERSON: I'm just questioning the whole focus on you using data centres as a way to sign up renewable energy contracts. Data centres need 24/7 baseload power. The renewable industry cannot deliver that. It's not the cheapest form of power when you take away the government's energy policies. Mr Edis : So how are we going to meet 32 terawatt hours of additional— Senator HENDERSON: I think the whole thing is a nonsense. That's why we have committed— Mr Edis : We need to answer that question. Senator HENDERSON: I don't need to answer any questions. Mr Edis : We as a community need to answer that question. Are you proposing it comes from coal-fired generators? Senator HENDERSON: We've committed to scrap net zero. We've committed to scrap a whole lot of policies because Australians are suffering from extraordinarily high power prices. Mr Edis : The issue is it could be worse if we allow those data centres to be built. If you are saying, 'No, I will allow them to be built,' then we need to work out how we are going to ensure that they're powered. Is it going to be from coal-fired generators? Senator HENDERSON: I'm drawing to your attention, after all the evidence we've heard today about how communities are impacted by data centres, my concern about the way the renewable energy industry has treated many regional Victorians and people living in regional communities, with no regard—and I would put the Victorian government squarely into the frame as well, stripping communities of any rights of appeal when it comes to the development of these wind farms and solar farms, but particularly wind farms. I understand I'm in the minority, in terms of the senators currently at this table, but I would say to you that data centres have a right to source the cheapest form of power, including 24/7 baseload power, and data centres should not be used as a way to shore up your industry. Clearly, people are not jumping on board and signing up to long-term contracts. There is so much uncertainty with what you deliver to this country, which is exactly why we've delivered our series of policies, including abolishing net zero. Mr Edis : Has there been any discussion in this hearing about what has happened in Ireland? Senator HENDERSON: I would ask you to— CHAIR: No, there hasn't. Mr Edis : I think you might want to look into what happened there, with data centre expansion that wasn't covered by additional new generation, and also into certain states in the US and what's happened to electricity prices for consumers other than the data centres. The data centres are seeing speed as an absolute paramount priority for them, and worrying about the consequences for the power sector has not been their core priority. Senator HENDERSON: Can I ask you about nuclear. Nuclear is emissions free. Our policy is to overturn the moratorium, or the prohibition, on developing nuclear in this country. Do you support potential nuclear powered solutions for data centres? Mr Edis : The issue will be the cost and the speed— Senator HENDERSON: No, don't worry about—I'm just asking, do you support in principle the use of nuclear for data centres? Mr Edis : The fundamental issue is the economics and the speed. If they want speed, the issue is, 'Go and have a look.' Let's go through it. What are the last two nuclear reactors the US built? What was the timeframe over which they were built? Senator HENDERSON: I'm asking the questions. Mr Edis : Look at the timeframes. One of them got cancelled because it took so long. The other one took over a decade. The same happened in France. The same happened in the UK. They're the only reactors that have been built in the developed world. There's a lot of talk about small modular reactors—not a single one operational. Senator HENDERSON: I understand the technology. As a matter of principle, do you support nuclear, which is emissions free, as an option for data centres? Mr Edis : Sure, they can do it, but they won't arrive in time. Senator HENDERSON: Dr Aberle, what about Clean Energy? Dr Aberle : It's not part of our members' portfolios, as far as I'm aware. They may have nuclear internationally; I'm not sure. But I would point to Mr Edis's comments. If the question we're trying to grapple with is the speed at which energy is built to supply the demand that is coming from data centres, then nuclear is simply not an option in Australia. Mr Kennedy : There is no ban on considering or analysing nuclear; there are bans on developing it at the moment. But the case to overturn those bans would need to be based on something of substance. Every time it's been looked at, it has been found to be expensive and time consuming. To what Mr Edis has said, the case studies overseas point in that same direction. Senator HENDERSON: Thank you very much. CHAIR:  I must say, I reckon a bunch of the communities who have data centres across the road from their houses—I don't think they'd want a nuclear power station across the road as well. Senator HENDERSON: Chair, can I raise a concern. I think a member of the gallery was filming me while I was asking my questions; is that the case? Member of the audience interjecting— Senator HENDERSON: If you could delete it, because that needs to be a decision of the committee, and I'm not happy for that. Thank you very much. CHAIR: Senator Pocock. Senator DAVID POCOCK: Thank you all for your time. It is an interesting discussion. I'm interested in how you think the Commonwealth should formally define and enforce additionality to guarantee that data centre PPAs underwrite genuine new renewable generation and firming, rather than simply existing or new projects that were going to happen anyway. Mr Upson : For large data centres, they would write a power purchase agreement with the development project. It would have to be a majority of the capacity of the project—not 100 per cent but at least the majority of the project—that has not achieved a final investment decision as of that time. And the project wasn't going to happen anyway; it needed a PPA from someone, as almost every large renewable energy project needs a long-term power purchase agreement to give debt and equity price certainty. If they write a PPA with a project that hasn't achieved the final investment decision, then it is additional and is incremental. The REGOs have attributes that you can trace to that, to make sure it goes to that plant, and the commissioning date of that plant is part of the REGO as well. Senator DAVID POCOCK: In terms of the commissioning date, clearly there are some challenges in the timeline. Given the scale of wind, solar and potentially battery projects to firm things up, and the time it takes to complete them, if a data centre becomes operational before it's contracted, with renewable facilities built, how should we go about bridging that gap and ensuring prices don't spike in the interim? Clearly, they're going to need power from somewhere. Mr Kennedy : There is a timing gap that's acknowledged between how long it takes to build a data centre and how long it takes to build the renewable projects intended to power it. The approach the CEC has put forward would see that interim period covered through certificates from jurisdictionally matched existing projects, but on the basis that the capacity required to meet the full expected load of the data centre has been contracted upfront, so that the market, when it's setting expectations and prices, can see that that capacity is coming and has been contracted. Senator DAVID POCOCK: How does that not push power up in the short term? Mr Kennedy : The prices are a function of expectations around future supply/demand balance. If people can see that that's been contracted and is coming into the system, they're going to approach that accordingly. Senator DAVID POCOCK: So demand for electrons now, before those future projects come on board—if you add a gigawatt or two of demand, that doesn't have an impact on prices? Mr Kennedy : I think that part of the challenge, too, is around the ramp profile of a data centre. Whilst the centre is likely to get built before the assets intended to power it, it typically takes a few years to then ramp up to its full output, so that would mitigate the impact that you're describing. There may still be some residual impact, but it would be significantly mitigated. Mr Edis : One point I'd add to that is— Senator DAVID POCOCK: I can see that point on a data-centre-by-data-centre basis, but one of the things that the community has been hearing about is that the planning system isn't really set up to deal with the cumulative effect. Sure, data centres are going to ramp up their energy demand over time, but, if you have 10, 20 or 50 data centres all coming online and then ramping up, that's significant, and I just can't see those renewable facilities being built in that timeframe. So I find it hard to hard to believe that there isn't going to be an impact on power prices in the short term. Mr Edis : To put the growth per annum in data centre electricity consumption in perspective, according to AEMO households right now are installing an amount of solar that would generate more per annum than the annual growth in data centre demand that's forecast. So it is a manageable issue. There is a challenge, I think, in the first, I would say, three to four years, where there are going to be some lags involved in essentially gearing large-scale renewables construction back up, but then, after that point, the renewables industry should essentially be able to catch up with data centre demand. So it's not a completely unmanageable problem when you think about it in terms of the fact that really what we've got to do at the large-scale level is essentially what the households are already doing with rooftop solar. Senator DAVID POCOCK: But isn't one of the problems that households are doing their bit—they're installing solar and batteries—and, without this extra demand from data centres, we'd be likely to see electricity prices begin to fall at a time when households are really struggling across the country? What I'm hearing is that data centres are going to suck up that excess energy, which means we will probably not see the kind of reduction in energy bills that we've been promised will come with renewables, and Aussie households who've done the right thing—invested in solar and paid for a battery—are not necessarily going to see the wider benefit across the community with lowering prices, because data centres have arrived and they want that power. Mr Edis : There is a challenge there. A data centre takes somewhere between 12 months and, I think, for the larger ones 36 months. A new solar farm will take 12 months before it starts to generate electricity, and it'll reach its full output within 24 months. A wind farm will usually start generating electricity within two years of commencement of construction and be fully operational within three. So there's just this inevitable timing challenge there, but it should be a short-term phenomenon, because what I expect will happen, if the government writes this legislation properly, is that it will give confidence for new projects to build more than what they've contracted with the first round of data centres. They might contract 60 per cent and build an extra 40 per cent capacity, which is surplus and for which they then know there will be a market waiting for them in another two or three years from another data centre. So another data centre will come forward, and that renewables industry has essentially pre-built capacity ahead of the demand, provided that they have confidence that legislation will stick and will not be unwound at a moment's notice from a future government. That can then ensure that this timing mismatch problem is a temporary issue. But yes, there is inevitably a problem there, with data centres being able to be constructed within the space of 12 months, and solar and wind farms taking longer. Senator DAVID POCOCK: This is one of the problems I have with how this is all being pushed. You say it's inevitable and just has to happen. But, at the end of the day, Aussies pay the price. We're not going to see lower energy prices, and it's very unclear what the actual monetary benefit is of these data centres over the long term. A lot of them seem to be owned by multinationals, who are very good at profit shifting. I don't think it's inevitable. I think the challenge and the opportunity for the parliament are to ensure that we do get the timing issue right, and that we put Australians and communities ahead of big multinationals who want to build data centres to speed up AI—which may or may not bring about the end of the world. Finally, there's a lot of talk about data centres stabilising the grid. Can you just explain what that means and what requirements we would need to have in place to ensure that does happen? Mr Kennedy : It feels as though data centre operators and developers are probably going to be best placed to go into the nuance of it. We understand there is some degree of flexibility of time and location of data centre load that can provide flexibility to the grid. We also understand that many data centre developers are looking to install on-site storage, which would obviously bring some additional flexibility in the grid-facing load, but they would probably be better placed to comment on the specifics of that. If I could just pick up quickly on the previous point, as Mr Edis mentioned, you wouldn't necessarily expect a new renewable asset that's contracting with a data centre to contract all of its load. So if they've contracted 60 per cent, 100 per cent of it's still getting built, and that would bring additional capacity into the market to favourably impact prices over the life of the asset, which will be 20-plus years, for instance, so that would more than offset any impact over the first year or so of that timing gap. CHAIR: Senator Hodgins-May. Senator HODGINS-MAY: Most of my questions have already been asked. I also want to build on Senator Pocock's comments around the optimism of that time gap being negligible and not having impacts on households across the country. As an example, we're seeing that the Victorian state government is fast tracking the approval of these centres but simultaneously pausing the Western Highway transmission lines. I feel like this conversation is in many respects finding the most optimistic pathway forward, but the reality is that there are governments and potential governments that are going to put a halt on those things. What, for example, would that pause on the Western Victorian transmission lines mean for confidence for the renewable energy sector to be going in and backing and matching the timeframes that these data centres are proposing? Dr Aberle : I'll just reiterate my comments earlier to Senator Hanson-Young in terms of the importance of getting those transmission lines built as quickly as possible. One minor clarification on the pausing of Western renewables link: that was the characterisation that probably many of us saw in the media. I think the Victorian government have subsequently clarified that they're only pausing the compulsory land acquisition element of what the project developer is doing, but that the rest of the project continues. That's a minor point, I suppose, but, still, it's true: it's really important that those transmission lines get built. More broadly, the last five or so minutes of the conversation just speaks to the importance of urgently getting as many renewable energy projects to financial close as possible so we can minimise the time where there are potential gaps in new demand and new supply coming online. As Mr Edis said at the very start of his presentation, we have enormous numbers of gigawatts of renewable energy capacity that has been developed. This is not about renewable energy developers having to go and find somewhere to put a wind turbine. These are approved projects that know exactly where the turbines are going to go. They've figured out all the bits and pieces, and they just have to get an offtake to go ahead. We really are just talking about construction timeframes. We're not coming up with de novo projects. Senator HODGINS-MAY: I know you're not the policymakers in this space, but, on the idea that the data centre has to come before the clean energy project, I think: why? I know that time is of the essence for these corporations. We haven't heard the community benefit from these AI data centres, so why do they get to set the terms on them developing first and the clean energy catching up? That's the question going over in my head. Mr Kennedy : If we think about the risk of the data centre developments not going ahead and who's best placed to wear that risk and how that risk is best managed, the benefit of attaching the obligation to bring the renewables with them, with the data centre developer, when they're making that investment is that they're highly incentivised to be confident that they're going to go ahead because they're wearing the costs of building the stuff that's going to power them and making a commitment to do so at that point. It feels as though, whilst you're characterising it as one coming after the other, sequencing it in this way and putting that obligation on the data centre developer to pull that capacity in the network and in the generation through with them is actually a de-risking mechanism here. Senator HODGINS-MAY: Just finally—and sorry if you've already said this—each of your respective organisations and member groups is of the view that it should be binding. They should be new renewable energy projects, not certificates, and they should also be paying for the grid-upgrading costs, as well as adding additional renewable energy into the grid beyond the load that they require. Are you, or all of your member groups, of that opinion? Mr Edis : No. I'll just clarify that. These—what they call REGOs—are a certificate. That is a perfectly sensible— Senator HODGINS-MAY: But a new— Mr Edis : But it has to be a new project. So, yes, it would be certificate based. The reason that's valuable is for the exact challenge that we're talking about, where a project could commit, let's say, a wind farm to build more than the capacity that they might have contracted with a particular data centre. Then they know they're going to create additional certificates, which they can then onsell to another data centre. The other issue is that one data centre may find, 'Oh, actually, there aren't the customers that I need, and I'm not using as much electricity as I thought I would need,' and they can then sell those certificates, which, essentially, are real megawatt hours. You don't get a certificate if you don't generate a megawatt hour. I can then sell them to another data centre. It gives some flexibility to manage the fact that things can change in the future. Senator HODGINS-MAY: But they can't just put a green label on electricity that was already going to be produced. Mr Edis : No. That's absolutely right CHAIR: Thank you all for being here today and for your submissions. We appreciate the time..