Hydro Tasmania expects to decide on 450MW power request for AI data centres by end of year

Hydro Tasmania expects to decide whether to approve an AI data centre company's request for 450 megawatts (MW) of power by the end of the year.

The state-owned hydro-electric power company has created a webpage to address community concerns and questions about the energy requirements for Firmus Technologies's AI data centres in Tasmania.

Firmus is building an AI data centre in Launceston, has approval for another at Long Reach in the Bell Bay Advanced Manufacturing Zone, and has submitted a development application for one at Wesley Vale in the state's north-west.

The company currently has a three-year contract for 104 MW of hydro power for the Launceston AI data centre, but needs a new deal to secure enough power for all three facilities.

Hydro said Firmus had requested a long-term 450 MW contract for the three facilities.

That is equivalent of up to 30 per cent of Tasmania's current energy use, and would make Firmus the state's biggest power user by a long shot; Bell Bay Aluminium is the current biggest user at 355 MW.

"We are assessing their request and expect an outcome to be known by the end of 2026," Hydro said.

New generation needed to power Firmus

Hydro said its energy system was currently "in balance", meaning it generates about the same amount of power as the state uses.

"Going forward this will not always be the case as these levels can vary year on year depending on delivery timing of new renewable supply and demand, usage patterns and how much it rains," Hydro said.

"450 MW is a significant increase in demand.

"Meeting Firmus' request would require more generation to be built in the state, including through new wind and solar developments which would be owned and managed by third-party private businesses.

The federal government is developing new laws that will require large AI data centres to bring their own renewable energy.

Firmus has pledged to go further, saying it would build two MW of new renewable energy generation for every one MW it uses.

Hydro outlined two options for what that could look like.

"Firmus could enter an agreement to contract energy directly from new wind and solar developers, leaving us to fill the gaps when there is little or no wind and sun. Our role in this is called firming," Hydro said.

"Firmus could enter an agreement to contract energy from Hydro Tasmania, and we could enter into direct agreements with the new wind and solar generators."

Hydro has key questions for Firmus

Hydro said in assessing Firmus's request, it would treat the company like any other major power user.

It said it would consider questions including:

Is Firmus a financially stable company?

How much new renewable generation is needed to meet their needs and when could this be built?

Would an agreement deliver profits for us (and ultimately you)?

Would an agreement align with our responsibilities to Tasmanians — including to act commercially and manage our water storages responsibly.