The federal government could force AI companies to boost Australia’s power grid and build new wind and solar projects to help supply their energy-intensive data centres, amid concerns the booming industry could suck up vast amounts of electricity and water.
Business groups, unions and the tech sector have welcomed the federal government’s national AI plan, which maps Labor’s plans for a light-touch approach to regulating the sector in a bid to capture economic and productivity benefits from the technology.
But tech experts have warned Australia has been too slow to set up guardrails and guidelines for AI, risking major harms and missing out on investment. With warnings AI tech could require 12% or more of Australia’s power, industry minister, Tim Ayres, promised a “co-requisite” for big firms to pull their weight.
“I want to see artificial intelligence digital infrastructure underwriting and securing our energy future using these investments to pay for enhanced capability,” he said.
Ayres’ decision not to pursue a new set of laws to govern AI, and instead rely on existing legislation, was welcomed by peak business groups eager to see the technology roll out faster.
The Business Council of Australia called AI a “once-in-a-generation economic opportunity” to boost productivity and raise living standards, but CEO Bran Black was still critical that even the light-touch regulation foreshadowed by Ayres would “hinder the potential benefits”.
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The Australian Council of Trade Unions welcomed commitments for unions and workers to be consulted about widespread workplace changes, claiming AI’s rollout had so far done little to improve working conditions, and instead had seen “Orwellian levels of surveillance” from bosses and more intense workplace conditions.
“Workers aren’t afraid of AI but are rightly sceptical about letting it go unchecked,” said ACTU assistant secretary, Joseph Mitchell.
Dr Sue Keay, director of the AI Institute at the University of New South Wales, said the government had been too slow to respond to growing concerns.
“The plan rightly lists everything we should be doing, but fails to commit to any real investment or any sense of urgency,” Keay said.
“It’s hard not to feel like we’re turning up to a global race in thongs, asking where the starting line is, while everyone else is already sprinting to the finish line.”
The plan also noted the need to expand new energy and cooling technologies for AI systems, noting data centres consumed about four terawatt hours of power in 2024 – 2% of grid-supplied power – with the Australian Energy Market Operator having forecast that could rise to 12% by 2050.
Concerns are growing worldwide over data centres diverting large amounts of water and power from local communities to be used in cooling systems. Ayres said the government would set out data centre principles in early 2026, pledging in a speech that “key co-requisites…
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