Microsoft, Google, Amazon urge Labor to speed up energy-storage projects to power data centres

However, companies’ procurement options in Australia will be more limited, confined largely to renewables and gas, backed up by batteries and diesel generators, after the Coalition’s pitch to build nuclear power stations failed to win over voters at the May 3 election.

So far, electric utilities and governments have sought to boost green energy storage mostly by deploying grid-scale lithium-ion batteries, which soak up surplus renewable power in the daytime and use it to plug gaps and stabilise the grid once the sun sets or during other periods of low wind and sunlight.

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But lithium-ion batteries have their limits: those installed around the country today exhaust their stored energy within one to four hours of full output and are mainly used for urgent discharges to keep the grid stable.

The Long Duration Energy Storage Council recommends the introduction of a federal target for the deployment of 30 gigawatts of more powerful storage assets with durations of eight hours-plus by 2040. These could range from pumped hydroelectric dams, which pump water to an uphill reservoir and release it down to spin turbines when needed, to other innovative technologies that store energy as heat or in chemicals for later use.

“This sends a powerful investment signal and provides policy certainty that developers, manufacturers and investors need to scale up,” it said.

Julia Souder, the council’s chief executive, said data centre owners were looking for more diverse sources of supply to meet their goals for reliable and sustainable power.

“The customers like our data centres are saying, ‘We need to replace our back-up diesel generators,’” Souder said.

“If Australia is going to be a renewable superpower, we need to make sure we have around-the-clock power.”

Alongside Microsoft, Amazon and Google, other key members of the council include data centre operator Compass, clean energy infrastructure investor Quinbrook, and Anglo-Australian mining giant Rio Tinto, which is seeking to repower its carbon-heavy aluminium assets and remote mine sites with renewables and storage.

A spokesperson for Energy Minister Chris Bowen said long-duration storage would be critically important in Australia’s energy transition, “whether it’s batteries, pumped hydro or other innovative systems”.

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The government’s flagship energy policy, the Capacity Investment Scheme, provides underwriting support for renewable energy generation projects only if they are also “dispatchable”, the spokesperson added. This means wind and solar farms must be paired with storage technologies to ensure they can provide power on demand.

Data centres in Australia are already significant power users, accounting for about 5 per cent of demand on the east coast electricity grid, according to analysts at Morgan Stanley. The investment bank forecasts the grid will be able to accommodate data centres’ expected increase to about 8 per cent by 2030.

However, the system will face more strain beyond that, it said, especially given most of the remaining coal-fired power plants are scheduled to close by the end of the 2030s.