Building data centres near existing solar and wind projects in regional Australia would not only support local jobs and industry, but could reduce the amount of energy going to waste.
The Electrical Trades Union released the findings on Wednesday from a report into NSW data centres, which are growing in number to meet rising demands for artificial intelligence tools.
Concerns have been raised about how much water and electricity the AI hubs will use, with Oxford Economics Australia warning they could demand 11 per cent of NSW's grid-supplied energy by 2030.
The Site It Right report, prepared by the Carbon Zero Initiative, found Australia had an opportunity to meet data centres' power demands by building them near existing renewable energy projects.
Analysis of electricity produced by solar and wind farms in regional NSW found almost one third (29 per cent) or 2.1 gigawatts was curtailed or lost during 2025.
That energy could be used by data centres during peak periods, the report found, offsetting their electricity needs and accelerating their development.
Building internet connections between regional data centres and Sydney would also be cheaper than new energy transmission lines, it found, and response times would be well within the standards for generative AI tools, cloud services and business software.
Sending data from regional centres to Sydney and back could take between 3.4 and 6.8 milliseconds, the study said, with a worst case response time of 15 milliseconds in regions such as Albury and Griffith.
The report proved data centres could provide significant benefits if planned correctly, Carbon Zero Initiative strategy lead Alexander Hoysted said.
"By placing large loads closer to renewable generation, excess energy can be consumed locally rather than curtailed," he said.
"Australia has a chance to create an industry that serves Australia by ensuring the right settings and proper community consideration is done ahead of any build-out."
The research issued several recommendations for state and federal governments, including fast-tracking projects proposed for regional areas, and creating incentives for data centres investing in local communities, such as those offering apprenticeships and training pathways.
Data centre operators consulted in the study supported its findings, with Firmus Technologies founder Oliver Curtis saying regional locations offered a practical opportunity to lower system costs, while WinDC chief executive Andrew Sjoquist said it could solve an energy challenge.
"Data centres are too often talked about as a problem for the grid," he said.
"The real question is where they are built and how they operate."
The report comes after the federal government issued five expectations for data centres, and after the NSW government and the Senate launched inquiries into their rapid growth and environmental and community impact.
