Australia to Mandate Data Centre Builders Cover the Cost of Electricity Use

Prime Minister Anthony Albanese has vowed new data centre developments will not drive up electricity costs for Australian households.The comments come as Albanese unveiled part of Labor’s long-term plans for managing the growth of artificial intelligence (AI), including intellectual property protections and the establishment of an Office of AI within the Department of the Prime Minister and Cabinet.“We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply, to pay their full share of grid connection so no costs are passed on to homes or businesses, and to put at least as much energy into our grid as they take out of it,” he said during a July 15 address at the University of Sydney.Albanese also said data centre developers would be required to become net electricity generators and minimise water use.“To build new renewable generation—and firming—to strengthen our national energy resilience and ensure data centres do not increase power prices for Australians,” he said.“Australia is the sunniest continent on earth but we’re also the driest.“Which is why our rules will require data centres to minimise their water use, maximise their energy efficiency, and pay for any additional water infrastructure required.”Albanese said Australia would be the first country to incorporate such a focus into a national framework governing AI data centres and their management.Racks of GPUs (graphics processing units) with a closed-loop liquid cooling system are seen inside an operational Microsoft data centre in Karawang, West Java, on Feb. 4, 2026. Yasuyoshi Chiba/AFP via Getty ImagesPM Promises Stronger Copyright Protection for Content ProducersThe prime minister also pledged stronger copyright protections for Australian creators, saying the government would introduce legislation to ensure writers, musicians, artists and journalists retained control over how their work was used to train AI systems.“An artist’s creative endeavour is their work and their property,” he said.“No company should use Australian books, music, art, or news to build or train AI without the artist’s control, and that includes the artist’s control of the price and value of their work. Anything less is theft.”Meanwhile, the Office of AI within the Prime Minister’s department will begin operating from July 15, coordinating the development of Australia’s AI standards across areas including copyright, energy, employment, education, digital safety and national security.Albanese said AI affected every portfolio and required a coordinated national response.Industry Body Calls for Greater Policy ClarityPeak industry body the Australian Industry Group called the decision to coordinate AI through the Department of the Prime Minister and Cabinet “sensible”, but said greater policy clarity was needed.“The reality is that artificial intelligence will impact virtually every aspect of Australian life ranging from the way we work, to the need for critical minerals for semiconductor-conductors, microchips and processors to supply data centres which are estimated to globally see more than $10 trillion (US$6.99 trillion) in investments by 2030,” CEO Innes Willox said.“The government needs to send a signal across all these areas whether it will employ a heavy or hidden hand when it comes to the regulatory environment that employers, providers and investors will face.“The government also needs to determine how open Australia is to data centre investment at a time of rising community concern about their impact on the energy grid, water resources, amenity and land use.”Meanwhile, Australian Conservation Foundation CEO Adam Bandt said Albanese had his priorities wrong.“The rush to approve data centres, which guzzle power and water, has the potential to derail Australia’s clean energy transition,” the former Greens leader said.“Communities want better protection for their local environment, their water resources and the climate, not fast-tracked approvals for tech giants.“If you want to build a data centre in Australia, you should be compelled to build the renewable energy and water recycling infrastructure to service it.”