Senate Environment and Communications Legislation Committee, , 6:51:53 to 7:00:16
Review of CEFC negotiations involving data centers, focusing on driving the use of renewable energy and the role of global investors in the sector.
Topics: Data centres, Renewable energy
Speakers: Speaker 27, Speaker 30, David Pocock, Unknown Speaker, Varun Ghosh, Interjection
>> Thank you very much Senator Hanson.
>> thank you for your time this afternoon. Um, in April, the AFR reported that the CFC was negotiating several deals involving data centers. Have any of those been finalized yet?
>> None. None have been finalized as yet. We're in the final stages of a term sheet um which will go to formal contractual documents uh not with a Greenfield data center but with an existing one. We've been under th under those negotiations for a considerable amount of time. So measure that in years, not months. It's a small data center and I think it's it's likely that that's probably the only data center um that I can see we we would have a direct involvement with in a funding sense that was done you know entered into around the time of the report that I think has been mentioned earlier that CFC um participated in um I guess what we'll get out of that is the learnings around green energy for data centers and how viable that is also recycled waters and things like that it's not a significant investment in terms of what the CFC does. Um I think also in that report um there was mention of a data center pipeline for the CFC. Um I think the way that we view data centers today is a bit like our industrial um users of energy is we see our role of creating in as much renewable energy as we can to service not only data centers but industrials but also for the benefit of consumers more generally.
Okay. Um, okay. A couple of questions from that. If it's if it's a small data center, um, and a fairly small deal, how why is that taken years of the CFC's
>> Uh, these things just take time. So, the the pro it's really up to the speed of what the project proponent works at. >> Um, you know, we commenced discussions uh with that proponent from memory back in early 25. Um, and and now they're at a stage where it's coming coming live. So, we could um conclude that in the near future.
>> And is that a Australian-owned company
>> uh it's a global investor um with local operations in data
centers? And so is there no delineation within the CFC um in terms of financing for sort of sovereign Australian companies versus um you know why why would the CFC be giving a global um company a leg up with data centers when it seems like there's you hundreds of billions of dollars being thrown at data centers by the big end of town. Um,
look, I'd probably agree with your last statement and that's why we don't have a pipeline that we're actively pursuing in data centers. Um, you know, this project, our involvement in this one is to drive them to acquire green energy and other uh ESG initiatives within the project otherwise they simply would not do it. So that's what our participation is about. It's an emerging and a new sector. I think us getting to know and understand from the inside those sectors is important. In terms of global investors, um we actually see it as as critical to Australia that we do encourage global investors to come and uh across all of our infrastructure, energy and everything else to just the quantum of the investment that's required through to 2050 is significant. So the extent to which we can help encourage that is something that we're
to add, uh, our our legislation contains a provision that requires that all of our investments be solely or mainly Australianbased and, um, and so that keeps us focused on the Australian market and and of course if you look across the, you know, the energy system and, you know, many other sectors of the economy, there's uh, a large uh, you know, participation by foreign investors in the Australian market. So just as a part of having influence and getting the sectoral change that we need to do to decarbonize Australia, we work with those uh foreign investors into Australia and even try to bring new uh foreign investment into the country uh where it will help facilitate uh our objectives and uh which are given to us by the government and the parliament. There's also some uh requirements uh for us to participate in Australian industry participation plans uh for large project financings and we would uh work with the Australian uh industry department uh as part of government to to you know put those requirements on developers so forth.
>> And Mr. McCartney, how are you driving the project towards using renewable
uh we've got contractual obligations under our uh financing arrangements that they have to deliver it.
being done before the national expectations for data centers come into effect and so there's no obligation around renewables.
>> Uh there's an obligation to acquire renewable energy 100% to run their facility. Um, you know, bearing in mind this has been getting negotiated since I think uh August 25 by memory
>> and that would that would be an obligation that we're requesting of the of the counterpart rather than um because this was small and predates uh government.
>> It's also this data center is under the scale I think of the intended uh requirements under legislation from the
government. And can you say what those obligations are without compromising any sort of commercial and confidence negotiations?
>> I believe they've still been I'm not sure that they've been finalized yet. So
>> I might you prefer to get that accurate and take it on notice. That's okay.
>> Okay. And so is there another mechanism to finance data centers or this is kind of a one-off and you don't this is not
It's it's not um we don't see this as a long-term investment strategy for CFC investing into data centers. I think as you um commented they appear to be very well funded. They appear to be getting um significant capital globally. So I don't think that's a role for us. Our bigger concern strategically is on the energy system for Australia, not just for data centers but for all consumers. And going back to where we started trying to drive through some of those renewables into the system with our
>> Thank you. And then just just finally um you said um uh Mr. Every solely or mainly Australia based.
>> Yes.
>> What does that mean in practice? Does it have a component of retained economic benefit or can it just be a multinational that is building something
here? Um it it it's a holistic test but uh we uh under the act the board is actually empowered to to set guidelines as to what solely or Australian solely or mainly Australianbased means. Uh those guidelines are published on on the CFC's website. Um but in practical terms we're looking for projects which will uh either take out a a large sort of piece of abatement or establish a new uh technology class or establish a credit precedent. So you know we're not looking to finance any project. And when it comes to um the solely or mainly Australianbased test, what we're really trying to see there is what's the level of commitment of of this business to Australia? What's this particular investment going to do? How is it replicable in this market? How does it demonstrate to a other Australian businesses uh you know that this is a pathway forward that can be followed if if if it is uh you know a genuinely uh fresh entrant into the
>> Thank you. Thanks Joe.