At a glance
Energy ministers agreed on 28 July to progress rules requiring data centres to offset their demand with additional renewable generation built in the jurisdiction hosting them.
A jurisdiction can opt out of the geographic requirement, and the communiqué gives being too small to host its own renewables as the example.
Compliance would run through a guarantee of origin scheme, which the Clean Energy Regulator says covers new or existing generators, leaving "additional" undefined until September.
CDC's Kane Thornton, the former Clean Energy Council chief, is pressing ministers for a more reasoned approach to the geographic condition.
Ireland's regulator decided the same design in December 2025, setting a test of 80% of annual demand from additional renewables generated in Ireland.
Ministers agree to mandate in-jurisdiction renewables, with an opt-out
Large data centres in Australia are set to pay for new wind and solar built in their own state or territory. Energy ministers agreed that on 28 July. They did not define what makes a project new, and the certificate scheme they picked to verify it counts existing plants too.
Queensland and the Northern Territory opposed the rule, a jurisdiction can exempt itself from the geography, and the legislation is not due until early 2027. The rule changes that settle the mechanism go to ministers in September.
The Energy and Climate Change Ministerial Council met virtually on 28 July and agreed "to progress regulatory arrangements to mandate that data centres offset their electricity demand by investing in additional renewable generation located in the jurisdiction where the data centre is located." A jurisdiction can opt out, the resolution says, "for example where it is too small to host its own renewables."
Compliance would run "through the use of a guarantee of origin scheme," which issues an electronic certificate for each megawatt hour and records where and in which hour it was made. Ministers also asked for National Electricity Rule change requests by September, so that data centres are treated as market participants and can show they offset demand through new generation, firming and demand flexibility.
Five of the data centre resolutions are recorded with Queensland and the Northern Territory opposing, and a standalone line states that Queensland dissented from the whole communiqué. Neither jurisdiction's reasons appear in the document. The Northern Territory has backed a proposed 2GW gas-fired AI campus near Darwin that would sit outside the national market, and Queensland is one of the states with no dedicated data centre policy instrument, where a state-scoped industry council launched in July to argue its case. States that stay in keep the right to add stricter local requirements.
The legislation is the government's to draft. Ministers also discussed AEMO's Step Change assumption that data centres reach almost 10% of the market's underlying demand by 2050, four times today's share.
The guarantee of origin scheme covers new and existing plants alike
A guarantee of origin certificate records where an electron was made and, by default, the hour. It does not record whether the plant was built to serve the buyer, because the Clean Energy Regulator's scheme takes in new and existing generators alike. Additionality is the test of whether a contract caused new generation to exist, and this is the instrument ministers picked to police it.
The Renewable Electricity Guarantee of Origin is administered by the Clean Energy Regulator under the Future Made in Australia (Guarantee of Origin) Act 2024. The scheme launched on 3 November 2025 and approved its first certificates on 30 April 2026. One certificate equals one megawatt hour, and certificates are time-stamped with the hour of generation by default. That is an advance on the calendar-year stamp carried by large-scale generation certificates, the tradeable units created under the Renewable Energy Target for each megawatt hour from an accredited power station.
The regulator's participant handbook opens registration to "new or existing generation facilities", and participation in the scheme is voluntary. Certificates can only be created for electricity generated or dispatched on or after the date a facility is first registered, so eligibility already has a date attached to it. Registration date is not build date. An existing wind farm that registers next year would start producing fresh certificates, so a vintage test has to be written into the rule rather than read off the register.
Large-scale generation certificates are weaker still. The Renewable Energy Target's large-scale goal has been met since early 2021 and the scheme closes at the end of 2030, and certificates surrendered from an existing accredited power station satisfy a renewable-matching claim with no new-build test attached. GreenPower is the Australian standard that carries one, requiring generation beyond the target's requirements.
Microsoft's most recent environmental data shows what the distinction is worth in accounting terms. It discontinued its programme of buying spot certificates from existing projects in the year to 30 June 2025 and says their impact is no longer included in its market-based scope 2 total, which rose from 259,090 tonnes to 2,707,428 tonnes.
CDC's Thornton argues the electricity market is national
Operators and their industry body have taken aim at the geography. Kane Thornton points to a national, broadly interconnected market and wants "a more reasoned approach to the geographic issue," applied consistently nationwide if ministers proceed.
Thornton ran the Clean Energy Council for more than a decade and stepped down on 1 August 2025. He is now head of strategic impact at CDC, and he made the buy-side case in an op-ed in The Australian on 30 July, "Data centres can power the energy transition, if policy settings are right." The op-ed calls Australian energy policy "a high-wire act, and has been for two decades," and says data centres "are a great long-term customer for renewable energy projects." On LinkedIn he wrote that much of the policy under consideration is straightforward and that "getting new renewable generation built has proven challenging." CDC's 2025 sustainability update reports that 95.8% of the electricity used in its data centres in FY25 was matched with renewable energy certificates, the instrument the September rule change has to grade.
Thornton told the Australian Financial Review on 29 July that "we've got a national energy market, and broadly it's all interconnected, and the power flows across the country." Data Centres Australia chief executive Belinda Dennett told the same paper that jurisdiction matching may not be feasible given the lag between a data centre opening and a renewable project delivering electrons, and that "a one-size-fits-all approach will not work."
Two mechanical questions sit underneath the geography and neither has a public answer. Developers want to know who signs the contract for new generation, the party that builds and operates the facility or the customer whose computing sits inside it. NEXTDC, AirTrunk and CDC all build data centres and lease space to technology companies, so the obligation could attach to a landlord or to a tenant. They also want to know whether it is measured against the electricity a site actually draws or against its nameplate capacity, the maximum it could consume at any moment.
The interconnection argument covers most of CDC's fleet. The national market runs across Queensland, New South Wales including the ACT, Victoria, South Australia and Tasmania, and reaches neither Western Australia, which runs on the South West Interconnected System, nor the Northern Territory. CDC's operating sites are in Canberra, Sydney, Melbourne and Auckland, with a campus under development at Maddington in Perth.
Ireland's regulator set an 80% Irish-renewables test in December
Ireland decided the same design seven months earlier. The Commission for Regulation of Utilities settled its large energy user connection policy on 12 December 2025, replacing criteria that had produced a de facto moratorium on new data centre connections while expressly declining to impose a formal one.
Test | Australia, proposed | Ireland, decided December 2025 |
|---|---|---|
What must be procured | Additional renewable generation, with firming and demand flexibility in scope for the September rule changes | At least 80% of annual demand from additional renewable electricity, plus new onsite or nearby generation or storage sized to the site's import capacity |
Where it must be built | In the jurisdiction hosting the data centre, unless that jurisdiction opts out | Generated in the Republic of Ireland |
How compliance is shown | A guarantee of origin scheme, alongside strengthened greenhouse reporting | A plan naming specific projects at application, then annual self-reporting to the grid operator |
Who is covered | Large-scale data centres, threshold not yet set | Sites with import capacity of 1MVA or more, roughly one megawatt of connection capacity |
Source: Energy and Climate Change Ministerial Council communiqué, 28 July 2026; Commission for Regulation of Utilities decision CRU2025236, 12 December 2025.
Ireland shows the geographic test can be imposed by regulatory decision rather than legislation, and enforced through contracts and reporting. Applicants have to put forward a credible plan naming specific renewable projects and timelines, then report annually to the system operator on renewable energy use, directly or through corporate power purchase agreements. The system operator can cut a site's import capacity where it falls short. The obligation phases in over a six-year glide path from the date a site energises, which is the Irish answer to the timing lag Dennett raised.
The decision does not define "additional" either, and it is not beyond challenge. The Irish High Court granted Friends of the Irish Environment, Friends of the Earth Ireland and ClientEarth leave on 28 April 2026 to seek judicial review of the policy, partly over the six years a new facility can run on fossil-fuelled generation before the 80% test binds, and partly because backup generation sits outside the 80% calculation.
9GW of wind in the pipeline against 18GW needed by 2030
AEMO's 2026 Integrated System Plan, released on 25 June, sets what 2030 needs against what has reached the connection queue.
Technology | Needed by 2030 | Applied for or progressing towards connection |
|---|---|---|
Grid-scale solar | About 20GW | Around 19GW |
Wind | Approximately 18GW | About 9GW |
Source: AEMO, 2026 Integrated System Plan, 25 June 2026. Pipeline figures are connection applications, not committed or delivered capacity; AEMO puts the average at about four years from application to full output.
The Clean Energy Council's Clean Energy Australia 2026 report records 2.3GW of new generation reaching financial close in 2025, down 46% on the year before, with onshore wind commitments down 59% to 0.9GW. Chief executive Jackie Trad said: "Financial commitments for large-scale wind and solar is at a decade low. That is a gap we must close." Storage set an annual record at 4.3GW worth A$4.8 billion. Australia committed batteries at a record pace in 2025 and large-scale wind and solar together at the slowest rate in a decade.
The council has since proposed how it would run the offset, and its answer puts a vintage test on the certificate rather than leaving it out. Under the Flexible Contracting Framework it published on 23 July, data centres would match grid consumption with new renewable generation using a mix of what it calls additional firmed renewables and certificates sourced from new projects. Certificates would cover residual variable demand and the gap between data centre and renewable build rates, phased in on a glide path, drawing on large-scale generation certificates until 2030 and guarantee of origin certificates after that.
The council cites modelling by Baringa for the Clean Energy Finance Corporation, published in December 2025, which found that without matching new renewable generation and storage, 2035 wholesale prices would be 26% higher in New South Wales and 23% higher in Victoria, with national electricity emissions 14% higher, about 6 million tonnes of carbon dioxide a year. Those prices reach households through the wholesale component of a power bill, which is set by the merit order that dispatches the cheapest generation first.
The states got to the same principle first. South Australia has built its data centre strategy around "new energy for new demand", and the Commonwealth's national expectations of March 2026 asked for new clean generation or storage without binding anyone to it.
What to watch
The National Electricity Rule change requests go to ministers in September, and they are where "additional" acquires a definition. A commissioning threshold on top of the guarantee of origin scheme is the item to look for first, since certificates from an existing plant would otherwise satisfy a rule written to fund a new one. The second is the signatory, because the obligation can attach either to the facility operator or to its tenant. The third is the measurement base, since metered consumption and nameplate capacity produce different obligation sizes for the same building.
The AI Standards carry minimum requirements on energy, water and location and go to National Cabinet in August. Queensland's dissent and the Northern Territory's opposition stand until either changes position, and both hold the planning approvals that decide where facilities get built. The opt-out is the other clause to read closely, since a jurisdiction that exercises it lifts the geographic constraint on anything built there.