The Australian Energy Market Commission (AEMC), the independent body that advises the Australian government on energy market rules and conducts reviews of the energy sector, has published draft technical standards for large data centres and similar facilities connecting to National Electricity Market (NEM).
The proposed technical standards may result in ‘faster deployment, lower costs, and better investment certainty’ as well as greater energy grid security, AEMC has said.
Industry and community stakeholders are invited to offer feedback on the proposed technical standards until 7 May, before the standards are finalised.
AEMC said the standards would help prevent consumers losing “billions in lost electricity supply or emergency network upgrades” due to fault-related failures impacting energy systems, while enabling investment, instead of blocking it.
The draft rule would raise the current threshold for large inverter-based loads from 5 megawatts (MW) to 30MW and embed this definition directly in the national electricity rules, which AEMO said will ensure that technical requirements will only apply to large scale projects that are most likely to affect power system security.
Nick Li, an energy specialist at Pinsent Masons, said: “The scale and speed of data-centre growth in Australia is now significant enough for AEMO to model data centres at their separate demand category within the NEM and call them ‘active grid participants’, with any sudden disconnection potentially triggering cascading failures and blackouts.”
“The publication of the new standards is intended to ensure that data centre development is smooth and does not impact electricity supply in the future by focusing on projects that have the potential to impact Australia’s energy security,” he said.
“The AEMC has stated that by matching the standards proposed or used in the US state of Texas, Ireland, and Finland, data centre operators can use the same equipment and feasibility studies as elsewhere. Standardising the approach would mean faster deployment, lower costs, and better investment certainty.”
Data centres will be required to meet new performance criteria, ensuring they can withstand disturbances to the power grid without going offline, and provide better data on how they respond to grid disturbances under the new rules.
Data centres currently make up about 2% of energy consumption in Australia, according to AEMO’s estimates. This is expected to grow sharply due to artificial intelligence’s heavy energy requirements.
For further information, please contact:
Nick Li. Partner, Pinsent Masons
nick.li@pinsentmasons.com
