The data centre boom is coming at a time of upheaval for Australia’s main grid as it transitions to cleaner energy, while the coal plants that have supplied the bulk of its power for decades increasingly bring forward their closures.

Although renewables’ share of the mix is growing, there are worries it’s not happening fast enough, with authorities fearing a shortfall of generation, storage and transmission lines to protect against the threat of price rises or blackouts once coal exits the grid.

Analysts at Morgan Stanley believe the grid will be able to accommodate extra demand from data centres’ growth, which it forecasts to rise from 5 per cent to about 8 per cent by 2030.

However, the system will face more strain next decade when the majority of the nation’s remaining coal-fired power plants are expected to have closed, they said.

“We see the power requirement for new Australian data centres as manageable for the Australian power system to 2030, but power could become a constraint in the 2030s given planned coal plant closures,” they said.

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UBS said data centres may provide benefits for grid planners trying to maintain system stability, given they offer consistent minimum demand 24/7 – similar to the role of aluminium smelters. But they would add “incremental pressure” during evening peak demand periods once the sun sets and solar output recedes, Allen said.

The spread between daytime and evening wholesale prices could widen to up to 70 per cent by 2030 due to coal closures and delays to the renewable rollout, he added.

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