Hydro outlines how it will assess AI company's enormous energy request

Tasmania's state-owned hydro-electric power company, Hydro Tasmania, has laid out its plans for addressing a request for 450 megawatts (MW) of energy from AI data centre firm Firmus Technologies. The company has stated that new generation capacity will be required to meet the increased demand, which could involve partnering with solar and wind developers. Hydro Tasmania expects to make its decision on the request by the end of the year.

The company has created a webpage to address community concerns about the energy requirements for Firmus's AI data centres in Tasmania. Firmus is building an AI data centre in Launceston and has approvals for another at Long Reach and one under development at Wesley Vale. Currently, Firmus has a three-year contract for 104 MW of hydro power for the Launceston facility, but needs a new deal to secure power for all three sites.

The 450 MW request is equivalent to up to 30% of Tasmania's current energy use, making Firmus the state's largest power user.

Hydro Tasmania is assessing the request and expects to have an outcome by the end of 2026. The key question is whether 450 MW of new energy can be provided and what commercial terms would deliver value to Tasmania while managing risks. The company's energy system is currently balanced, with power generation matching consumption. However, this balance may be disrupted as renewable energy supply and demand patterns change over time.

To meet Firmus's request, more generation capacity will need to be developed in the state, likely through new wind and solar projects owned and managed by third-party private businesses. Hydro Tasmania will not be involved in funding, constructing, or maintaining these new developments. The federal government is developing laws that will require large AI data centres to generate their own renewable energy, with Firmus committing to a two MW new renewable energy generation target for every one MW it uses.

Hydro Tasmania outlined two options for how Firmus could meet its energy needs. The company could directly contract for energy from new wind and solar developers, while Hydro fills the gaps during periods of low wind and solar output. Alternatively, Firmus could contract for energy from Hydro Tasmania, and Hydro could enter direct agreements with new wind and solar generators.

When assessing the request, Hydro Tasmania will treat Firmus like any other major power user, considering factors such as the company's financial stability, the need for new renewable generation, the profitability of agreements, and alignment with Tasmania's responsibilities to its residents. Tasmania is conducting an inquiry into AI data centres, with submissions closing on September 21, and Hydro Tasmania has pledged to submit its own input.