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UK Energy Secretary Miliband Pushes Southern Renewable Development by Reforming Transmission Charges

about 7 hours ago
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UK Energy Secretary Miliband Pushes Southern Renewable Development by Reforming Transmission Charges

Key Insights

  • Australia's energy market operator forecasts a significant surge in data center electricity demand, potentially reaching 40 TWh by 2050, equivalent to one-fifth of the current grid output.

  • This increased demand, particularly for renewable energy, could help unlock stranded wind and solar projects by providing local load, reducing the need for extensive new transmission.

  • The anticipated growth in data center and industrial loads is projected to mitigate the problem of minimum demand on the grid, lessening concerns about curtailing rooftop solar PV.

  • Industry interest in renewable-heavy grids, driven by cheaper power and zero-emission supplies, contradicts traditional arguments against high renewable penetration.

Australia's electricity grid faces a transformative challenge and opportunity as updated forecasts from the Australian Energy Market Operator (AEMO) reveal a substantial surge in projected data center electricity demand. Insights from AEMO's Forecasting Reference Group indicate that data center consumption could reach 15 gigawatt-hours by 2030 and a staggering 40 terawatt-hours by 2050, representing approximately one-fifth of the grid's current total output. This dramatic increase, significantly higher than previous estimates, carries profound implications for Australia's ambitious target of achieving 82 percent renewables by the end of the decade.

While a surge in demand might appear to complicate renewable energy targets by requiring more wind and solar generation, industry experts suggest it could paradoxically aid the transition. Currently, tens of gigawatts of proposed wind and solar capacity remain stranded due to insufficient transmission infrastructure, particularly in designated Renewable Energy Zones (REZs) like those in New South Wales and Victoria. Developers, including Engie, propose co-locating data centers within these REZs. This strategy would allow renewable output to satisfy local demand directly, circumventing the need for extensive and costly long-distance transmission upgrades to distant load centers. Alex Wonhas, former AEMO senior executive and head of Ampyr Energy in Australia, notes that their Singapore-based investor, AGP, also has data center interests, presenting unique "behind-the-meter" opportunities for combined development.

The prospect of cheaper, zero-emission power is a critical draw for energy-intensive industries, including data centers, contradicting conventional arguments that high renewable penetration deters industrial growth. ElectraNet, responsible for South Australia's highly renewable-penetrated grid, reports a doubling in electricity demand from large industrial loads over the coming decade, excluding green hydrogen projects. Christiaan Zurr of the Clean Energy Council emphasizes the potential speed of data center development, stating, "The potential speed of data center development is what makes this a key variable to watch. Anecdotally, data centers can be up and running in a few years, or less." The challenge lies in ensuring the supply side can match this rapid, uncertain growth.

Furthermore, this burgeoning demand offers a crucial solution to an emerging grid stability concern: minimum demand. AEMO has previously expressed apprehension over the escalating growth of rooftop solar PV, which can reduce grid demand during midday to levels requiring "emergency backstops," such as curtailing rooftop solar or mandating battery standby. However, the new forecasts, factoring in data center growth and broader electrification, project a slower decline in minimum demand. AEMO has upgraded its minimum demand forecasts for Victoria, NSW, Queensland, and South Australia, with Queensland no longer anticipating negative minimum demand and NSW delaying such a scenario by nearly five years. This shift suggests that new, flexible industrial loads could play a vital role in balancing the grid, mitigating the need for drastic measures to manage high renewable penetration.