Meeting APAC demand for AI datacentres – what needs to happen?

Australia is well-positioned to service the APAC data centre market, according to Sabooh Whitelaw of Lumea, but will need to manage network constraints, as power consumption triples to meet AI demand.

Ms Whitelaw says Australia’s competitive renewable prices will appeal to APAC customers, with energy prices representing a “significant part of data centre economics”.

However, without a solid plan, Australia could struggle to meet the power demands of the digital economy, particularly during hours of peak consumption.

“We are really lucky here in Australia, in that our renewable prices – especially in NSW and Victoria – are some of the best in APAC. In Sydney, we also have a dense population of data centres, which is a major advantage, in terms of latency,” she said.

“At the same time, we – like everyone else – have increasing demands on the electricity network, and, it is not yet clear how it will cope in peak hours.
“When everyone comes home from work and turns on their air conditioning, there is a chance the network will struggle to double or triple its output, to service the power requirements of data centres.”

Overseas

Overseas, network constraints have already seen several cities reject development applications for new data centres, despite the economic advantages they bring.

In Dublin, Equinix was recently denied a planning appeal to develop a data centre at Profile Park – an amendment to its previously granted approval for the DB8 infrastructure.

More recently, Google’s application to build another Dublin data centre was rejected by South Dublin council, which cited, “the existing insufficient capacity in the electricity network (grid) and the lack of significant on-site renewable energy to power the data center”.

Ms Whitelaw says Australia could see the same fate, unless appropriate action is taken.

“We could, if we’re not careful, get to the point where we are having to turn proposals down and forego the economic benefits data centres can bring which will turn away the data centres operators to other markets in the APAC region” she said.

Economic drivers

Indeed, failing to capitalise on the data centre market would leave a hole in the economy, with the infrastructure widely considered a driver for growth in host cities.

As well as supporting essential services – like government, health and financial systems – data centres can drive innovation and attract investment in energy supply. At the local level, they also create jobs.

“Data centres provide the infrastructure for cloud computing, data storage, and processing, so they are really important in the digital economy and in our everyday lives. They also enable faster, more reliable data processing and storage, which is necessary for digital transformation,” Ms Whitelaw said.

AI data centres have even greater economic potential, she added, given that they do not need to be located near end users, and can capture larger markets, further afield.

“Traditionally, data centres have mainly been used for the cloud, requiring them to be in close proximity to end users. With AI, the need for end user proximity diminishes, opening the door to more lucrative markets, like India and China, where populations are much larger.

“If we could tap into the APAC AI market, that would be huge for Australia,” Ms Whitelaw said.

Competition from overseas

Without a solid network and energy strategy to service the increasing demand, Australia could lose out to countries like India and China, which have been making a concerted effort to capture the data centre boom, incentivising investment into those regions.

In 2024, China invested $6.1 billion, which included the deployment of three server hubs on its east coast, and five on its central/western corridor.

By 2027, its domestic data centre market is set to reach US$86 billion, reflecting a compound annual growth rate of 5.70 percent.

“Governments in these countries are really putting in a lot of work and incentives to attract data centres into their regions,” Ms Whitelaw said.

While Australia has historically won over proponents with its safe political landscape, and fast approval process, other APAC countries are now catching up.

“In Japan, it can take up to seven years for a data centre to secure transmission grid connection. In Australia, it takes 18-24 months, and we’re looking to get that down to 12 months. But we are now starting to see other countries, like Malaysia, streamline their processes, in a bid to capture more demand. So we need to stay ahead of our game.”

Australia’s energy, land and resource availability is also a drawcard, but may not be enough to compensate for network constraints.

“We’ve got so much land, and a lot of these data centres have traditionally been land players. They bank land anywhere in the metro regions, where they can find existing data centres.

“However, they’re now beginning to realise that their land holds more value with a reliable power source.

“On the plus side, our transmission and distribution networks have received a lot of investment over the years, and we are seeing a lot of new generation coming online daily. But we also need that reliability piece to stay competitive.”

Importance of partnerships

To maintain Australia’s position, Ms Whitelaw says data centres would benefit from partnerships with renewable generators, storage companies, government and regulatory bodies, and network owners.

She says this is key to managing the power demand challenge in face of unprecedented industry growth.

“Traditionally, a lot of their data centre industry has been quite solitary. Partnering is great, because it brings in expertise that they can’t have in house and fosters collaboration across industries which is necessary to ensure we do not face the power constraint challenges that other countries are grappling with. Also, utilities and renewable energy generation is so important that they need to work hand in hand.”

Partnerships can also foster education and dispel myths, in an ostensibly technical industry.

“Not many stakeholders understand that cooling requirements of a data centre can be just as energy-intensive as storage requirements – especially on hot summer days.

“Knowing this can help you better manage energy consumption. For example, if there’s ambient temperature outside, you could turn down the air conditioning and save on cooling.

“As industry enablers, we [Lumea] share a lot of technical knowledge with stakeholders.”

Lumea also helps data centres connect to the transmission network more efficiently. As a middle party, it has relationships with each tier of the value chain and can provide expertise in network and system strength requirements.

“Our role is to invest in the connection assets that are required for any large load or generator to connect into the transmission network.
“In doing that, we also bring everyone together – the transmission, the data centres, and renewable developers, and do a bit of a matchmaking.”

Further insight

Sharing more expert views on Australia’s position in the APAC data centre market, Sabooh Whitelaw will present at the upcoming Australian Data Centres, Power & Water Summit, hosted by Informa Connect.

This year’s event will be held 10-11 June at the Swissotel Sydney.

Learn more and register your tickets here.

About Lumea

As a trusted infrastructure partner, Lumea is helping data centre customers with their energy requirements and to connect into the transmission network more efficiently.

It is bridging the gap between utilities, government, and developers to enable faster, more flexible, and lower-emissions growth.

About Sabooh Whitelaw

Sabooh Whitelaw is a seasoned renewable energy executive with over 20 years of Australian and international experience spanning the finance, banking, and energy sectors.

With qualifications in Chartered Accountants and a Masters of Environment, Sabooh brings a unique blend of commercial acumen and environmental expertise to the renewable energy industry.

She has a keen interest in enabling the growth of digital economy in Australia and has been a thought leader in the industry in the recent times.