Issue 258, October 2026
As we enter the last quarter of 2026 the nation's energy debate is focussed on three main areas: consumer power prices, the federal government's energy transition and the emergence this year of data centres as major community area of concern. All are ingredients in the political wrangling fuelled by opinion polls that, increasingly, do not show Labor in a good light federally and in Victoria (where an important election with strong energy elements will be held in November).
"Australia's energy transition has been thrown a curve ball in the form of a rapidly expanding data centre sector—a behemoth that has its sights set on deployment Down Under" — commentator and engineer Phil Kreveld. "How we feed this power-hungry beast, and how it will behave in the grid, has become a subject of great debate."
"The same decline that promises cheaper electricity for consumers can reduce the revenue available to companies building new generation, making it harder for developers to achieve the returns required to justify billions of dollars of investment" — Colin Packham, energy reporter, The Australian newspaper.
"The challenges of Australia's energy transition – from a system once fired by coal and gas to one powered by solar, wind and supporting technologies – are being underlined on an almost weekly basis" — The Guardian newspaper climate and environment reporter Petra Stock.
"Investors, it seems, will need to brace for yet another period of energy policy turbulence" — Ryan Cropp, Australian Financial Review energy and climate reporter.
"Finance is amoral, not immoral. Capital does not move because something is worthy. It moves when risk, return, policy and incentives line up" — Climate Energy Finance director Tim Buckley. "Australia has the capital, resources, engineering capability and renewable energy potential. The challenge is aligning policy, finance and industry quickly enough to turn those advantages into long-term national value."
"Leaders across industry and academia are rethinking what it will take to build a resilient, intelligent and future-ready energy system for Australia. A grid that wasn't built for energy flows of today" — Energy Today newsletter reporting a Melbourne forum on the energy transition. "Part of the challenge lies in the sheer scale of transformation underway and the fact that Australia's grid is no longer defined by a handful of large, controllable generators feeding power downstream."
"Polling has consistently shown that energy consumers support the idea of the energy transition in theory, but they don't support the realities. Consumers want cheap and reliable power first and foremost. They don't want ideological targets being the end goal of their energy system" — Zoe Hilton, Affordable Energy Australia.
"Australia is conducting a dangerous experiment, replacing reliable, dispatchable power with intermittent renewables in the name of net zero. After two decades of forcing low-density wind and solar into the system, electricity is neither cheap nor secure. The Australian Energy Market Commission has abandoned its promise that renewables would drive prices down. It now expects real prices to rise13 per cent this decade – and that is probably optimistic" — economist Stephen Anthony.
Can Australia reach the Albanese government's target of having 82 per cent of electricity coming from renewable energy by 2030? It's now a regular media question.
Dylan McConnell, an energy systems researcher at the University of New South Wales, tells The Guardian newspaper that the task if now "extremely challenging" and the roll-out of data centres "will make things harder."
The Clean Energy Council says "it's do-able," pointing to 70 renewables projects now at financial close or under construction.
Last year's forecast for data centre power demand in 2034-35 by the Australian Energy Market Operator came in at 21.4 terawatt hours — compared with the current 5 TWh — but the latest, just released, is for 34 TWh, representing a sevenfold rise over today's levels.
"Rapid growth in data centres, driven by increased artificial intelligence adoption and cloud services, remains one of the most significant sources of forecast growth and uncertainty as a strong pipeline of projects is evident in grid connection enquiries," AEMO says in its new "statement of opportunities."
The operator says it has taken in to account the potential development of 225 data centres, although it cautions that more than 40 per cent of those mooted in 2025 have now either been dropped or cut back in demand estimates.
It adds: "Data centres are expected to become an increasingly significant driver of electricity demand over the medium and long term, particularly in NSW and Victoria where the concentration of development is projected to be greatest."
Meanwhile the London Economist news magazine reports that its research shows Australia has the world's third-largest plans for computer clusters — eclipsed only by the US and China. The Economist estimates the proposed capital outlay on Australian centres at $156 billion in US currency.
The London Financial Times cites the Commonwealth Bank as estimating that current business plans will require investment in Australia of 100 billion US dollars. "For Australia," the newspaper says, "developing data centres — as well as the energy needed to power them — would be a helpful way to offset a faltering consumer economy."
Federal Climate & Energy Minister Chris Bowen has done a backflip on so-called green hydrogen.
Bowen, one of the leading boosters in past years of the concept for development in Australia, told an ABC Television program in mid-September that he "had never quite bought the hype" of the technology. He said it has "proved slower and more expensive to develop" than the federal government hoped. He added: "It's not dead. It does have a future."
News media have been quick to point out that Bowen previously claimed green hydrogen would be a "vital" and "serious" technology in the government's efforts to decarbonise. He is on the media record predicting in 2023 hydrogen would generate $50 billion by 2050 through "creating tens of thousands of jobs in regional areas as Australia transforms to a renewable energy superpower." Bowen also declared: "Green hydrogen, is really the only game in town when it comes to ultimately supporting the Australian and international industries, adding "hydrogen is central to the Australian government's vision for a Future Made in Australia."
The latest comments saw the Coalition's energy spokesman, MP Dan Tehan, attack Bowen as "a fraud," declaring that the government has "ploughed billions of taxpayer money into green hydrogen projects that simply haven't stacked up."
In a parliamentary debate on the issue, Bowen pointed out that in 2022 Tehan, then a minister, had said: "Export of green hydrogen will put Australia at the forefront of an emerging renewable energy market leading to new jobs, new business and environmental dividends."
According to the Department of Climate Change and Energy's latest program details, up to $1 billion is available for the second round of the government's "Hydrogen Headstart" program on top of $1.25 billion committed to two projects through the first round.
An opinion poll undertaken in Victoria's Gippsland region by Melbourne-based Affordable Energy Australia has found that 62 per cent of respondents think the energy transition is "going too fast."
Zoe Hilton, a director of the lobby group Coalition for Conservation, said 51 per cent of poll respondents declared that keeping electricity bills affordable should be the top priority of the Victorian energy system, with supply reliability second and emissions reduction third. However, she says, only 13 per cent of respondents would accept $50 being added to their bills to make the transition to a greener power system move faster.
Ninety-three per cent of those who undertook the poll expressed concern about the cost of their electricity and gas bills.
Hilton adds that polling in the State has "consistently shown that energy consumers support the idea of the energy transition in theory, but they don't support the realities — consumers want cheap and reliable power first and foremost.
"They don't want ideological targets being the end goal of their energy system.
She says that the Victorian Labor government has repeatedly told Victorians that replacing Yallourn and Loy Yang coal-burning plants with wind and solar power will make bills cheaper.
"But the cost of delivering the government's offshore wind targets seriously calls that claim into question."
And she declares: "Any policy that makes power more expensive will lose support from the Gippsland community, which is bearing the brunt of the energy transition."
Victorians are going to the polls in November.
Meanwhile, Gavin Dufty, director of energy at St Vincent de Paul, has told the ABC that the fundamental problem facing all political sides in Victoria is a looming crunch in electricity supplies as first Yallourn and then other coal plants exit the system.
He describes Yallourn as "beyond rescue," saying it would be "risky in the extreme to try to extend its life yet again."
Western Australia's Opposition is attacking the Labor State government for spending $30 million on an advertising campaign promoting its renewable energy transition plans as "a waste of money," saying the funds would be better spent on upgrading power supply facilities.
The money includes $12 million for advertising overseas, promoting WA as "the State of Energy."
Meanwhile the State's energy minister, Amber-Jade Sanderson, has criticised WA's mining industry for "retreating" on decarbonisation commitments in WA's north-west Pilbara region. "If West Australian households, mums and dads, can put solar panels and batteries on their houses and engage in the energy transition and decarbonise, so can the big miners," Sanderson says.
I keep quoting Britain's Sir Dieter Helm in this newsletter because he keeps saying sensible things about energy that have relevance beyond his home base in Britain.
He's been at it again during September, publishing a book and related commentary on the case for climate and energy realism.
In an associated podcast, Helm says: "In the conventional narrative about decarbonisation, net zero is going to be achieved by building lots of wind farms and installing lots of solar; batteries are going to fix the intermittency problems when the sun does not shine and the wind does not blow; and it is all going to be cheap and can be delivered at sufficient scale to keep to the 2015 Paris Agreement target of well below 2°C of global warming. There would need to be a bit of gas, little or no coal, and, more recently, a good dose of nuclear, now added even by the greenest environmentalists. It would all be win-win-win – cheaper, more secure – and it would deal with climate change."
What makes all this "so deeply concerning" he declares is not just that it does not address why the concentration of carbon in the atmosphere has been marching up at around 2ppm a year since 1990, and now at nearly 3ppm.
The conventional narrative in the 1990s and beyond, Helm points out, was that energy demand and GDP growth had decoupled.
"Economies could carry on expanding and at the same time use less and less energy – both in aggregate and in the intensity of energy in each unit of output."
However, he argues, the reason the relationship between economic growth and energy demand broke down was in large measure due to changes in the composition of economies, and especially European ones.
"Global demand did not stop going up. Energy-intensive industries deserted Europe and boomed in China and South-east Asia. Hence China emerged as the great polluter – and by far the greatest in emissions."
In the process, he points out, China has become the largest coal burner – now with well over 50 per cent of the total global coal burn. And, as costs and prices of energy rose in Europe, new investments in energy-intensive production moved overseas.
"What we are now witnessing more generally across economies is a technology shift towards new energy-intensive industries not seen since the coming of steel in the late 19th century. These new technologies require lots of energy and they require it on a firm, not intermittent, basis.
"The energy they need is overwhelmingly electricity, and so electrification is rapidly advancing in those countries grasping the new economic opportunities and economic growth they may bring.
"And intermittent generators like wind and solar do not meet the new AI industries' demand for the five nines – electricity that is 99.999 per cent reliable."
Helm declares: "With a doubling of demand, it will be an incredible achievement if oil, coal and gas burns were lower than their current levels in 2050, and that would still commit us to a lot more global warming, and still breach the 2°C targets, possibly by a large margin. The share of fossil fuels may fall from 85 per cent, but if the world economy doubles, the aggregate burn would hold up even if the share halved, with all the terrible consequences for climate change. The greater the growth of the world economy, the more rapidly the share has to fall."
He argues that there are two radical implications: "We are going to have to adapt to a lot of climate change; and, if we want to mitigate climate change, in addition to all the current measures, economic growth and the associated consumption have to be reconsidered."
And, he says, "recognising the awesome nature of the challenge in front of us may be frightening (and) people may want to close their ears.
"But ignoring the facts does not make it go away. Climate realism is the first step in rebasing climate policies and facing up to what is likely to be coming."
This is serious stuff and we do not see it reflected in Australia's domestic debate or existing and putative policymaking.
Investment in copies of Helm's latest book for supply to every member of our parliaments would be a sensible way to help change our debate.
Keith Orchison
25 September.