SA energy minister supports gas for data centres, conflicting with federal renewable rules

South Australia energy minister Tom Koutsantonis said he is “absolutely fine” with gas-firmed data centres, stating, “We support the idea of gas use to firm data centres the same way we support the idea of gas firming our renewable energy right now.”

According to the minister, gas can guarantee electricity when the sun or wind is unavailable.

State vs Federal Conflict

The federal government’s Data Centre Strategy, released earlier this year, emphasises the state’s renewable energy growth. Under these rules, new data centres must tap only new renewable energy to receive approval. Where firming capacity is required to balance the grid, the strategy suggests using long-duration batteries rather than gas.

Federal Energy Minister Chris Bowen has stated there are no exemptions to this renewable-only requirement unless the alternative energy supply is cheaper than renewables. Bowen added that the regulator must be convinced any deviation from the rules will create downward pressure on electricity bills.

While South Australia’s minister advocates for gas firming, no timeline has been given for specific data centre approvals in the state.

Opposition Criticism

• Kirsty Bevan, the head of the Conservation Foundation of SA, labeled the minister’s position a “step backwards” for both the government and climate action.
• Rob Simms, leader of the SA Greens, termed the stance an “outrageous” reversal of prior government policy, highlighting that it marks a “total backflip from where the government was just a few months ago.”

Federal Energy Minister Chris Bowen is presently at COP31 in Antalya, Turkiye. The Australian Energy Regulator will assess data centre exemption requests on a case-by-case basis.

Background

Luminity stated on 30 October that Data Centres Australia forecasts Australian data centre capacity will reach 3.9 GW by 2030. The publication highlighted that 97 new facilities are scheduled for construction by that deadline, which would introduce 2.3 GW of additional capacity. According to the same report, five data centre projects with a combined total of 1.4 GW were in the implementation phase as of June 2026.

In a separate update on 29 October, Luminity noted that the Australian Energy Market Operator has identified 225 data centre projects currently under development, equating to a total capacity of 67 gigawatts. On 27 October, Luminity cited a Smart Energy Council report predicting that linking 5 GW of data centres without corresponding new generation could increase power bills by $40 billion from 2029 to 2035. The council supports enforceable connection terms to ensure data centres bear the financial burden of any delays in new generation, with suggested strategies requiring these facilities to secure new renewable power.

What to watch

South Australia aims to reach 100% net renewable electricity by 2027, a target that sits in tension with the state energy minister’s argument. Tom Koutsantonis claims that without gas, data centres will turn to diesel or coal.