Powering the AI Economy: Australia in Focus

AI is reshaping the investment case for energy infrastructure. Decarbonisation has long underpinned investment in renewable energy. Now, the extraordinary growth of AI and the energy-intensive data centres behind it is adding a powerful new source of electricity demand. This creates a compelling question: where will the capital needed to power the digital economy come from and does AI pose a new opportunity for increasing revenue from renewable energy assets?

Historically, electricity demand growth was relatively predictable. AI has changed that equation. Unlike many traditional industrial loads, data centres require reliable, around-the-clock electricity. As data centres expand and workloads become more AI-intensive, demand increases. Recent forecasts suggest Australia’s data-centre electricity demand could triple by 2030, rising from around 5.2TWh in 2026 to 15.8TWh by 2030, before reaching 34.3TWh by 2036, whereby Australian data centres could consume almost as much electricity as all households in New South Wales and Victoria consume today.¹

Meeting this demand will require substantial investment across generation, grids and storage. Without additional renewable energy and storage, data centre growth could lift New South Wales wholesale power prices by 26% and Victorian prices by 23% by 2035, while increasing National Electricity Market (“NEM”) grid emissions by 6 million tonnes of CO2 annually.²

The common goal for policymakers and data centres

The message from policymakers is becoming clearer: the Prime Minister and Energy Minister have commented in public addresses that new sources of power demand must be matched by new sources of supply. Legislation looks set to follow in 2027. As data centres expand, there could be a growing  need for investment in renewable generation and storage capable of supporting their substantial electricity requirements.

For large data-centre operators, energy security is a business-critical requirement. Downtime can have significant operational and financial consequences. Our discussions with operators indicate there is a demand for long-term partnerships that can meet growing power needs through a combination of renewable energy generation, storage and grid supply. Together, these partnerships can deliver not only clean electricity, but also reliability, firming capability and resilience.

This creates a powerful alignment of interests. Meeting growing electricity demand from data centres efficiently and reliably will require a range of energy solutions, with long-term, low-carbon power likely to play an important role.

Renewable energy developers benefit from demand certainty and long-term revenue visibility to support investment. The result is a growing ecosystem of renewable generation, battery storage, transmission infrastructure and long-duration contracting arrangements that will underpin both Australia's energy transition and its digital future.

Diversification at the centre of resilience

Now with over 20 years’ experience investing in Australian renewables, Foresight established the Australian Renewables Income Fund (ARIF) in 2018 to invest in the country’s energy transition. The portfolio spans renewable generation, storage, grid infrastructure and enablement services – the same assets that can be used  to support the country’s AI-demand. Today, ARIF manages more than A$1.3 billion across a diversified portfolio of operating assets and a significant development pipeline in Australia and New Zealand.

One of ARIF's strengths is its diversified exposure across wind, solar and hydro, plus a strong development pipeline, with each technology playing a distinct role within the energy system. Wind and solar provide low-cost renewable generation, hydro offers dispatchable generation capability, and battery storage helps smooth variability and supports grid stability. Together, this diversified mix positions the portfolio to support a more flexible and resilient energy system.

As AI reshapes electricity demand, not all renewable assets will benefit equally. Diversified portfolios combining generation, storage and firming capacity, backed by operational and contracting expertise are better positioned to meet the complex needs of large digital infrastructure customers. Data-centre growth creates an opportunity beyond simply owning more megawatts. Long-term offtake from large, creditworthy customers can support new renewable and storage capacity, helping convert rising power demand into durable, risk-adjusted cash flows.

Beyond Generation: Capturing Value Through Market Expertise

The convergence of the energy transition and AI-driven demand is creating new opportunities for asset optimisation. Historically, renewable projects were often financed around long-term fixed-price contracts. While contracts remain important, increasingly dynamic wholesale electricity markets are creating greater scope for sophisticated revenue management. ARIF's investment approach combines contracted revenues with carefully managed merchant market exposure. Supported by dedicated engineering, development and energy-markets capabilities, this creates the potential to capture additional commercial value as electricity markets evolve.

Foresight’s existing operational portfolio also provides the potential to aggregate generation across assets and develop higher-value portfolio products for data centres and electricity trading desks as existing as-generated PPAs expire. Similarly, through the application of AI within asset management, Foresight may be able to enhance the performance, reliability, and value of its renewable energy assets through technical analysis, performance optimisation, and data-driven insights.

A Long-Term Structural Opportunity

The rise of AI is increasing electricity demand and at the same time Australia transforms its energy system, bringing together four long-term themes: digitalisation, decarbonisation, energy security and sustainability. Foresight sits at the intersection of these trends. Through its diversified portfolio of operating wind, solar and hydro assets, developing battery storage platform and growing energy-market expertise, Foresight is working with investors and stakeholders to develop and manage infrastructure that can support Australia's next phase of economic growth. Local landowners are one of the important stakeholder groups and Foresight believes careful stewardship helps to deliver positive local outcomes such as additional sources of revenue for landowners, job creation, and community funds for local projects.

The opportunity extends beyond renewable generation. It encompasses the delivery of secure and resilient energy supplies, support for Australia's growing digital economy, and long-term  value creation through active management and responsible infrastructure ownership.

The future of AI will depend on access to abundant, reliable and increasingly sustainable electricity. As digital infrastructure and energy infrastructure become ever more interconnected, investors who can own, develop and optimise those assets are likely to be among the long-term beneficiaries of this transformation.