South Australia backs gas use for data centres as AI power demand rises

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SA backs gas for data centres

Highlights

South Australia's Energy Minister Tom Koutsantonis endorsed gas-generated power for AI data centres to firm supply when renewables fall short.
Quantum DC paused its 1,200-megawatt Tungkillo data centre project, planning for 20 percent of its energy from on-site gas and the rest from renewables.
Critics, including SA Greens and conservation groups, warn gas-backed data centres risk undermining South Australia's 100 percent net renewable electricity goal by 2027.

Policy shift on data centre power

As reported by ABC News, South Australia's Energy Minister Tom Koutsantonis says he is "absolutely fine" with gas-generated power being used to help supply proposed AI data centres, arguing gas can firm electricity supply when solar and wind output falls.

Koutsantonis says the government supports gas use for data centres in the same way it supports gas firming for the broader renewable energy system. He says the facilities need large amounts of electricity on a continuous basis, and gas could be used to guarantee supply if renewable generation drops.

The position draws attention because the government's Data Centre Strategy, released less than five months ago, said South Australia could produce the clean energy needed at scale to power the artificial intelligence build-out. Under that strategy, new data centres are required to provide their own power.

Industry pipeline and political response

At least four major data centre projects are under discussion in South Australia. Developer Quantum DC has paused plans for a 1,200-megawatt facility at Tungkillo after previously estimating about 20 per cent of its energy demand would come from a gas power station on site, with the remainder supplied by renewables.

Other proposals include Iren's planned A$10 billion, 800-megawatt facility at Bundey near Robertstown in the Mid North, while Firmus has previously announced plans for data centres near Tailem Bend and Port Augusta. The scale of those projects is intensifying debate over how the state balances investment, grid reliability and climate targets.

Critics say the government's stance marks a retreat from its earlier clean-energy message. SA Greens leader Rob Simms calls it a "total backflip" and urges a moratorium on new data centres, while Conservation Foundation of SA chief executive Kirsty Bevan says expanding gas supply would undermine the state's progress toward 100 per cent net renewable electricity by 2027. Data Centres Australia chief executive Belinda Dennett defends a role for gas generation, but says renewables still remain central and warns investment could move elsewhere if projects wait for the energy transition to be completed.

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