SA government accused of backflip over gas for AI data centres

Mr Koutsantonis told the ABC that gas could be used to 'firm up' or guarantee ongoing electricity to data centres 'if the sun stops shining or wind stops blowing'. The government's own Data Centre Strategy, released less than five months ago, stated: 'South Australia can produce the clean energy needed, at scale and on time, to power the artificial intelligence revolution'. Under the strategy, new data centres would be required to supply their own power.

Developer Quantum DC, which yesterday announced it was pausing its plans for a 1,200-megawatt data centre at Tungkillo, had previously estimated about 20 per cent of the energy it needed would be supplied by a gas power station to be built on a section of its 220-hectare Adelaide Hills block. The rest was to come from renewables. Apart from Tungkillo, plans are underway for at least three other major data centres in SA, including a $10 billion 800MW facility proposed by Australian company Iren at Bundey near Robertstown, and AI giant Firmus's previously announced plans for data centres near Tailem Bend and Port Augusta.

Conservation Foundation of SA chief executive Kirsty Bevan said using gas to supply energy to SA's data centres would be a 'step backwards' for the government and the climate. 'South Australia has led the nation on renewable energy and is aiming for 100 per cent net renewable electricity by 2027, but that progress could be undermined by proposals to lock in more gas,' she said. Ms Bevan said using gas would also ignore 'community expectations,' adding: 'With energy storage and other backup technologies available to support grid reliability, expanding gas supply for data centres and AI infrastructure is a step backwards.'

When asked about the potential environmental impacts of using gas for data centres, Mr Koutsantonis said: 'Well if you don't let them use gas, they'll use diesel or they'll use coal.'

SA Greens leader Rob Simms called the shift a 'total backflip' and said green-lighting gas projects was a major step away from previous policy. 'This is outrageous,' Mr Simms said. 'We don't need more dirty gas here.' He urged the government to reconsider and proposed a moratorium on data centre construction.

Political parties including the Liberals, One Nation and the Greens have welcomed the pause on the Tungkillo development and united in the upper house to establish a parliamentary inquiry into data centres. The SA government is currently establishing a regulatory framework for AI data centres, with dedicated legislation set to be introduced to parliament this year.

Belinda Dennett, chief executive of national peak body Data Centres Australia, defended the need for gas power generation but said renewables would still have a substantial role. 'I think assuming that suddenly this is all about gas is wrong, there is still a huge commitment to renewable energies,' she said. '[But] If we wait until we've gone through the energy transition, this investment in data centres will have moved elsewhere.'