Got a Licence for That?
Australia has done well for itself digging prosperity out of the ground. But the next big opportunity for Australia is infrastructure for a services and software economy, powered by the cheapest form of electrons; the ones we get from the wind and sun.
Last week, we saw how efficiency matters in this equation; co-locating energy with data centres reduces grid pressures and decentralizes compute consumption. Renewable Energy Zones could be the ideal locations for regional development hubs that host new job-creating industries - like data centres.
However, despite the fact that 70% of farmers would consider hosting new energy infrastructure, the common media narrative is one of conflict and tension in the regions.
A Map of the Future
We’ve already mapped the next resource provinces: more than 20 Renewable Energy Zones (REZs) have been declared or drafted, and up to 48 identified by the Australian Energy Market Operator (AEMO).
Each REZ could also become a powerhouse for renewable energy generation, data storage, and AI compute. Instead of sending electrons hundreds of kilometres along costly transmission lines, what if we bring the data to the energy. Done right, REZs will become hubs for the two great transformations of this decade: the energy transition and the data driven economy.
One example is Firmus, a data centre powerhouse that recently announced it would open a new data centre in northern Tasmania, and while “behind the meter” arrangements are still challenging, data centre operators understand these zones could be affordable - even ideal - locations.
You Got a Licence for That?
But “done right” matters.
A NSW Parliament inquiry into REZs found that many regional communities feel consulted at rather than partnered with. Consultation has felt like a performance, with some residents asked to attend up to five separate consultations in a single week!
In many places around Australia social licence is the sticking point of the transition. Without it, everything stalls.
Social licence is a tricky topic and an unpopular term with some because it brings to mind a formal or static endorsement - like an environmental approval. In practice, a social licence is formed by relationships between individuals who live in a community, and individuals who propose to change that community. That relationship changes over time, never static, never formal and never purely transactional.
As this recent article points out, developer and government practises in this field are constantly under pressure and constantly improving. As CZI found in a recent project the recurring investment potential each year from renewables is significant - estimated at ~$25 million per year per zone - from landholder and community benefit payments alone.
But that $25 million is the tip of the iceberg. Streamlined consultation and more investment in local government, non-government organisations and community groups (which already have social licences) is crucial.
There are opportunities for communities to take stakes in projects, for local employment through regional skills programs, and for increasing local services like childcare, healthcare and infrastructure upgrades for roads and internet services. REZs have the potential to become regional opportunity zones.
Aligning REZs with Data Centres
The fastest way to align data centres and renewables today is through Power Purchase Agreements (PPAs).
PPAs lock in long-term offtakes for renewable projects giving them bankable customers and allow hyperscalers the option to go carbon-free. Microsoft’s recent 300 MW solar PPA in NSW is a preview of this potential. They’re easy for hyperscalers, and provide certainty for generator projects.
But we can be more ambitious. If structured creatively, they could include community benefit clauses and regional co-investment funds. They can help finance local batteries, grid upgrades and shared infrastructure. PPA buyers, as currently offered, simply don’t rank local jobs or community benefits very highly in their decision making, as this report demonstrates.
That’s why we need to embed social licensing in investment instruments. Could a next-generation PPA tie a data centre, a battery and a local council together under one framework?
A Path Forward
The Carbon Zero Initiative believes Australia can turn REZs into digital powerhouses by leveraging clever policy to bring industry, government and community closer together:
Extend the Capacity Investment Scheme (CIS) to cover projects which include co-located digital loads.
Lean into existing local groups doing this work, such as the CWA, Landcare or the Regional Energy Accord.
Streamline consultation to deliver better engagement and offer adequate compensation across the development supply chain.
Publish a national DC transparency code for energy use and emissions, particularly those built in REZs.
Regional Australia carries a remarkable psychological, economic and social burden; there’s a sense that, rather than being the beneficiaries of economic transformations like this one, communities like Orana and New England are dumping grounds for infrastructure, the benefits remaining in the city.
Headlines like this matter. Renewable and digital infrastructure already have champions in these communities. Let’s invest in them to build digital infrastructure where the energy is clean.
