NSW Environment Minister Penny Sharpe ‘worried’ AI data centres will drive up energy pricesAbout $100bn worth in AI data centre projects are in the offing in NSW, but one minister is “worried” they could drive up energy costs.Nathan Schmidt2 min readFebruary 24, 2026 - 10:28AMNewsWireNSW Environment Minister Penny Sharpe has admitted she is “worried” data centres used to drive AI will increase the cost of electricity.Ms Sharpe was grilled over the state government’s approach to the construction of new data centres, of which up to 90 are already operating, during a budget estimates hearing on Tuesday morning. The NSW government’s Investment Delivery Authority (IDA) is currently exploring applications for about $100bn worth in new data centre projects.Asked by Liberal MLC Jacqui Munro, Ms Sharpe admitted she was “worried” the establishment of new data centres could increase the wholesale energy price in NSW.“One of the key things I worry about every day is the impact of prices on households and businesses,” Ms Sharpe said.“When it comes to energy, there is no doubt that increased demand from data centres could significantly put pressure on prices.”NSW Environment Minister Penny Sharpe admitted she is ‘worried’ data centres used to drive AI will increase the cost of electricity. Picture: NewsWire / Nikki ShortThe inquiry was told the wholesale price was directly affected by demand, and that as a result all increased demand had the potential to impact prices.Proposed data centres could lead to an additional 12 per cent demand on the energy sector, the hearing was told. Ms Sharpe said there was “a risk” of increasing prices, but that the state government was exploring how data centres may connect to the grid and the energy mix.She said the Department of Energy did not have it available, but would be able to provide analysis of the potential impact of data centres. Addressing the hearing, Ms Sharpe said “you can’t go anywhere without talking about AI” and data centres.“NSW is a really attractive place for people to invest … (and) there are a range of reasons for that, partly because we’ve got a very clear pathway to renewables,” she said.The IDA received 26 submissions during the expression of interest round – about $100bn worth in projects, Ms Sharpe said.Ms Sharpe said the IDA was exploring those submission while the state government was simultaneously developing its data centre strategy. Liberal MLC Jacqui Munro, left.. Picture: NewsWire / Nikki ShortThe establishment of new data centres is set to be explored in a separate NSW parliamentary inquiry, the first of its kind.Both the Coalition and the Greens have touted the probe as an opportunity to explore how data centres, which underpin the AI “revolution”, impact critical infrastructure, such as water and electricity, and what opportunities they provide. “This inquiry is our chance to have a much-needed public conversation on AI, resources and the public good, where the government has failed to lead,” Ms Munro said in a statement. Greens MP Abigail Boyd warned data centres would impact water and electricity pressures.“Around the world they (data centres) have driven up power prices, stalled housing development and destroyed communities through noise and heat effects,” she said in a statement last month.The wide-reaching probe will include Ms Boyd and Ms Munro, and will investigate workforce, water, land impacts of data centres, as well as the scale and trajectory in NSW.More related storiesMotoring NewsChina’s ‘Shark Killer’ ute hits AusThis rugged looking ute promises to be the next big thing in the Aussie off-roading world, threatening conventional pick-up trucks.Read moreEnvironmentMajor update in disgusting fatberg issueThe culprit of beaches contaminated with sewage balls has been ordered to clear a waste ‘fatberg’ that could be larger than four buses.Read moreInnovationWorld can’t believe CEO’s ‘evil’ commentOpenAI CEO Sam Altman is at the centre of controversy again this week after he let slip some eyebrow-raising remarks at a Q&A session.Read more