“To build new renewable energy generation and firming to strengthen our national energy resilience. To be net-generators, not net-users.”

Albanese also announced the creation of an Office of AI within the Department of the Prime Minister and Cabinet, effective immediately, to coordinate the design of the new standards and bring together work currently being conducted across multiple ministries.

He said he would seek agreement on the standards framework from state and territory leaders at a National Cabinet meeting next month, with legislation targeted for introduction to Parliament early next year.

The energy obligation is the most consequential element of the announcement for Australia’s electricity system.

Under the proposed rules, large data centres would be required to pay their full share of grid connection costs, with no costs passed on to households or businesses, and to reduce their power use when the grid is under strain.

The framework would require the new generation capacity to be built on top of the existing renewable energy rollout rather than drawing from it, implying a material increase in the pipeline of wind farms, solar PV plants, substations and transmission infrastructure required nationally.

Australian trade association the Smart Energy Council welcomed the announcement, stating on LinkedIn: “The Smart Energy Council fully supports this position: data centres must bring additional, clean energy, not compete with households and businesses for our existing energy supply. We look forward to working with the new Office of AI and industry to ensure this emerging sector contributes to Australia’s clean energy transition.”

Earlier this year, an industry coalition had already warned that a social backlash was inevitable if data centres were allowed to draw from Australia’s existing renewable energy supply rather than funding new generation, with demand forecast to grow from 3TWh to 30TWh by 2035.

The Australian Energy Market Commission (AEMC) had separately proposed new technical standards in March 2026 requiring large data centres to remain connected to the grid during faults rather than disconnecting, to avoid the risk that large synchronised disconnections could destabilise the National Electricity Market (NEM) during disturbances.

Writing for Energy-Storage.news earlier this year, Jeff Monday, SVP & chief growth officer at energy storage system integrator Fluence, argued that battery storage co-located with data centres could allow operators to absorb surplus renewable energy generation during periods of oversupply and discharge during peaks, turning what would otherwise be a grid constraint into a grid asset.

This article first appeared on our sister site PV Tech.

Our publisher, Solar Media (part of Informa Group), will host the Battery Asset Management Summit Australia 2026 on 25-26 August at Amora Hotel Jamison in Sydney. You can find out more about the Summit on the official website.

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