Albanese Faces Datacentre Backlash as Energy Demands for AI Skyrocket

Per The Guardian, Anthony Albanese is walking into Wednesday's national cabinet armed with a legislative promise meant to soothe conservative premiers spooked by federal encroachment on the datacentre boom — while the Australian Energy Market Operator quietly projects a seven-fold surge in power demand from AI infrastructure by 2035.

The power grab behind the "AI law"

Albanese plans to tell national cabinet he will introduce legislation next year imposing copyright, security, safety, and skills standards on AI businesses — and that new approval laws will complement, not override, state rules. Queensland and the Northern Territory are pushing back. The friction is real, but the framing is dishonest: this is not a states' rights dispute. It is the federal government scrambling to assert authority over an extraction economy that has already begun reshaping Australia's grid before a single national rule exists. The spectacle of celebrity bonds and record-setting friendships commands more column inches than the material conditions of the energy transition — see, for instance, the absurd theatre of Andy Cohen setting the record straight on his longtime bond with John Mayer while AEMO's projections sit largely unreported.

The seven-fold surge

AEMO's annual Electricity Statement of Opportunities makes the stakes concrete. Datacentre electricity demand is projected to climb from 5 to 34 terawatt-hours by 2035-36 — jumping from 3% to 13% of total consumption. In a high-growth scenario, that figure hits 52 TWh, a ten-fold increase over the decade. Australia currently operates 165 datacentres, with another 225 in development. More than a third of projects listed in 2025 have already been cancelled. That volatility is precisely why Amanda McKenzie, CEO of the Climate Council, warns that datacentres are set to devour an enormous share of Australia's electricity in the coming years, and that "we've got one shot to get the rules right now" to ensure the buildout doesn't strain the grid and push up pollution.

The floor that should have been the ceiling

Albanese's proposed baseline obligations — datacentres must not push up energy prices, must meet their own infrastructure costs, minimise water use, and avoid siting near homes, schools, or agricultural land — are the minimum a functioning regulatory state would impose. That they require national cabinet deliberation tells you everything about the political economy of the AI buildout. Projects approved before the new rules take effect remain under existing state and territory law, meaning the fossil-intensive pipeline already in motion escapes the framework entirely.

Daniel Westerman, AEMO's chief executive, tried to soften the blow: record levels of new generation and storage coming online had improved the reliability outlook, he said, even with expected coal retirements. Technically accurate. Politically necessary. Also a comfort blanket. Seven-fold demand growth does not negotiate with optimism. The legislation Albanese promises is overdue. Whether premiers and ministers alike can resist the extraction lobby when it arrives draped in "investment" rhetoric will be the only test that matters.