National Cabinet has agreed to mandatory standards requiring large data centres to offset their total energy demand with new renewable generation and firming. The landmark decision lands as NEM average prices surged 66.7% week-on-week to $98.22/MWh, extending a volatile run for the wholesale market. However, Prime Minister Anthony Albanese has reportedly softened the renewables-only approach, a compromise allowing jurisdictions like the Northern Territory to use Beetaloo Basin gas to power their data centre ambitions. The move mirrors a Spanish proposal requiring its data centres to source 80% of power from new renewables.
The policy certainty is expected to unlock significant investment. HMC Capital announced it has secured equity for its first utility-scale battery, while preparing a further 2 GW of renewable and storage assets for final investment decisions. At a commercial scale, CleanPeak Energy secured a $50.3 million contract for a renewable microgrid at Western Sydney International Airport. The project will integrate 13.5 MW of solar and a 120 MWh battery, following expanded federal and state incentives designed to spur such developments.
Despite the long-term demand signal, large-scale batteries face immediate headwinds. Industry analysts, cited by RenewEconomy, describe the current market as a 'bloodbath' for big batteries. Utility-scale battery revenues are facing downward pressure from the prolonged operation of coal-fired generators. A boom in household battery uptake is also eroding the arbitrage opportunities that grid-scale assets rely on, creating a more competitive landscape than previously forecast.
Developers are pursuing technical advantages to navigate the tough market. DC-coupled solar-plus-storage projects can expedite grid connection approvals by up to six months compared to traditional AC-coupled designs. This offers a faster path to commissioning for hybrid assets. Meanwhile, direct government intervention continues to underwrite new capacity. The federal government launched a Capacity Investment Scheme tender targeting 1.8 GW of new renewable generation in Western Australia to bolster the state's clean power supply.
The physical rollout of new infrastructure faces growing community opposition. Landholders hosting wind turbines and transmission lines report increasing intimidation and harassment from anti-renewable groups. These social license conflicts are complicating project development in regional areas. The scale of Australia's challenge is also put into perspective by global activity. The Saudi Power Procurement Company awarded contracts for 2 GW / 8 GWh of battery storage, a single procurement round that highlights the massive international capital flows into the sector.