Industry experts raised concerns at the Committee for Economic Development of Australia (CEDA) State of the Nation conference in Canberra on Thursday night, where AI regulation and innovation became a major focus of discussion.
Electricity companies at the event were vocal in their support for data centres, saying they could help to underwrite investments in renewable energy projects if managed correctly.
The event comes after tech firms including Microsoft and Amazon announced multibillion-dollar investments in building local data centres, and after the federal and NSW governments launched inquiries into their impact.
More than 160 data centres have already been built in Australia, according to a Climate Council report, with another 90 in planning stages.
Many companies were racing to build centres to meet demand for AI tools, CDC Data Centres chief strategy officer Dr Jack Dan said, but not all of them were trustworthy organisations.
"There is this narrative that data centres will grow at an almost exponential rate and, with any industry where you have significant growth, that industry also attracts a significant amount of speculators, a significant amount of fly-by-night, cowboy-type behaviour," he said.
"One of the things we have to ensure is that those actors don't ruin it for everyone."
Australia needed stringent and clear regulations to govern data centre approvals, Dr Dan said, including targets for water and energy use, local content and innovation.
Without vetting the companies behind applications, he said, inexperienced landowners could also slow down developments with unviable proposals.
"They see a power connection or a power line in the background and they go 'I'm going to become a data centre developer'," he said.
"There is a lot of that kind of behaviour in the sector and obviously those people are not able to attract the capital, to get the underwriting, to get the customers and so on but what they are very good at is clogging utility pipelines, water pipelines, planning pipelines."
But building data centres could deliver benefits to Australia's energy system, AGL chief executive officer Damien Nicks told attendees, as their energy requirements could support investments in renewable projects.
He said the developments could also be built on the sites of decommissioned power stations to support regional jobs.
"Data centres are energy intensive but managed in the right way, with the right settings, they can help underwrite and support new renewable investment, improve the system utilisation and help lower costs over time," he said.
The federal government issued five expectations for data centre developers in March and is accepting submissions to its data centre inquiry until September.
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