Victoria's power on the line as data centres boom

Huge data centres — the buildings that power the internet, apps, and artificial intelligence — are being built across Melbourne at a rapid pace. These facilities use enormous amounts of electricity, and experts are warning that Victoria may not have enough power to go around. The state is already dealing with aging coal power stations that are closing soon, and now it must also find green energy for a booming tech industry.

One of the biggest wind farms in the world sits in Victoria's south-west, near a small town called Rokewood. The Golden Plains Wind Farm has more than 200 turbines spread across 16,000 hectares of farmland. Andrew Riggs, the managing director of TagEnergy, which runs the farm, says it supplies about 9 per cent of Victoria's yearly energy needs. In the coming months, it will nearly double in size — growing from 756 megawatts to 1.3 gigawatts, which is close to what a coal-fired power station produces.

Two of the wind farm's biggest customers are Amazon and Equinix, both large tech companies that run data centres. Together, they will use more than 25 per cent of the energy from the Golden Plains Wind Farm — around 352 megawatts. These companies want to use green energy because their own customers demand it. Mr Riggs says the wind farm is able to meet that need through this project.

Data centres are growing fast all across Australia, and Melbourne is the fastest-growing market in the country. The Victorian government says $6 billion was invested in the sector in just the past year. The first data centre in Victoria was built in 2012, and there are now 50 operating in the state. Most of them are clustered around Melbourne's west.

At full capacity, data centres in Victoria are allowed to draw up to 840 megawatts from the electricity grid. By 2030, their total energy use is expected to quadruple — meaning it could be four times what it is today. Ten new data centres have already been approved for construction, and eight more are being assessed. It is not just streaming videos and storing files driving this growth — artificial intelligence is now one of the biggest reasons demand is rising.

One major company in this space is Airtrunk, which acts like a landlord for tech companies. It provides the building, cooling systems, and the energy that tech giants need to operate. Sabooh Whitelaw, a vice-president at Airtrunk, says the demand from tech companies to set up in Australia is 'insatiable' — meaning it never seems to stop. She says Australia is seen as a great place for data centres because of its renewable energy, vast land, and stable government.

Airtrunk currently uses about 255 megawatts of energy across Australia. By 2030, it expects to draw 1.3 gigawatts from the grid — the same amount the entire Golden Plains Wind Farm produces. That is a huge increase, and it shows just how much power the data centre industry plans to use. Other data centre companies have similar plans, which means the pressure on Victoria's electricity supply will keep growing.

Victoria's government has welcomed the data centre industry, but with some caution. AI and Digital Economy Minister Anthony Carbines told a big industry event in Melbourne that companies must build 'responsibly and sustainably.' He warned that data centres put 'an extraordinary amount of pressure' on electricity grids, water systems, and local communities. He urged companies to involve communities early and share the benefits.

Not everyone is happy with how fast data centres are being built. Several local councils in Melbourne have put a temporary stop — called a moratorium — on new data centre developments. These include the City of Maribyrnong, Hume, and Brimbank. The Greens political party has called for a nationwide moratorium until proper laws are in place to manage the impact on energy, water, the environment, and communities.

All of this is happening as Victoria's old coal-fired power stations are shutting down. The energy market operator says Victoria will have no spare electricity supply buffer after 2029. The Yallourn coal power station, which provides a big chunk of Victoria's power, is expected to close by 2028. Tennant Reed from the Australian Industry Group says this means wholesale electricity prices will likely rise if new power sources are not found in time.

To help solve the problem, two major electricity transmission line projects have been proposed. One is the Victorian to NSW Interconnector West, also known as VNI West, which would connect Victoria to the New South Wales electricity network. The other is the Western Renewables Link, a 190-kilometre line between Sydenham and Bulgana that would bring wind, solar, and battery power from western Victoria to the rest of the state. The Western Renewables Link has already received environmental approval from the Victorian government and is awaiting final approvals before work can begin.

However, both projects face opposition. The VNI West line has been criticised because of its high cost — between $7.6 billion and $11.4 billion — and concerns from farmers about it crossing their land. Political party One Nation and the federal Coalition have both promised to scrap the VNI West project if elected. One Nation leader Pauline Hanson has also spoken at events in rural Victoria, telling landholders that their property rights have been taken away and calling for coal and nuclear power instead.

The Western Renewables Link is also facing scrutiny. The Coalition says it will pause and review the plan if it wins government. The project, now costing $1.5 billion, has had an independent cost review ordered by Victoria's premier. About half of the landholders along the route have already signed agreements to allow the transmission line on their land, with the rest still in negotiations over compensation.

Experts warn that without the Western Renewables Link, Victoria could face brownouts — periods when the power supply dips below what is needed. Mr Reed says the growth of data centres makes this risk even greater. He says any new government would likely think twice before blocking a project that adds so much power to the state. Building new coal plants or nuclear power stations is not a quick fix either — the CSIRO says a nuclear plant takes around 15 years to build.

The Golden Plains Wind Farm does not need the new transmission lines because it connects to an older power line built in 1980 to serve an aluminium smelter. But Mr Riggs says the wind energy industry as a whole depends on good transmission infrastructure. He says transmission lines allow energy to flow from areas with a surplus to areas that need more. Without them, many renewable energy projects simply could not operate at full capacity.