Outback town says grid connection key to capturing AI investment

Data centre developers eye outback Queensland as AI demand surges Wed 5 Aug 2026 at 9:21am In short: Experts say northern Australia is well placed to capitalise on the AI boom as data centres become increasingly important to the nation's economy and security. An outback town says interest will not translate into reality until north-west Queensland is connected to the national electricity market. What's next? Cloncurry Mayor Greg Campbell hopes a firm timeline for the western leg of CopperString will give investors the certainty needed to move forward. As Australia races to build the infrastructure behind the AI boom, an outback Queensland mayor says the next generation of data centres should be built hundreds of kilometres from the nearest city. Behind the rapid rise of artificial intelligence is a growing network of data centres built to keep up with the spike in demand for computing power and storage. With about 250 data centres operating across the country, some communities have begun pushing back over their proximity to urban areas. In the north-west Queensland town of Cloncurry, about 120 kilometres east of Mount Isa, Mayor Greg Campbell says the bush could prove the perfect home for the critical infrastructure. "I've been talking about data centres with different companies for many years … but in the last month, I've had two return calls from companies," Cr Campbell said. "I think these companies are trying to get ahead and looking to areas … outside that urban area." Data centres hinge on CopperString Data centres have traditionally required considerable water to transfer heat away from their servers and large energy loads to fuel computing power. Efficiency gains through closed-loop systems and water recycling in new generations of data centres have reduced the amount of water required, but power remains the biggest hurdle in places like north-west Queensland. Cloncurry, like all communities across the region, is not connected to the national energy market, relying on decentralised renewable projects and large diesel generators to power the area. The state government has committed to connecting the region to the east coast through the CopperString project, but Cr Campbell said there was still no firm timeline for construction. "CopperString is probably the precursor to turn that interest into a genuine business," he said. "Because the north west isn't connected to the national electricity market, the mines, predominantly as the biggest users, will say that it's some of the dearest power probably in the world. "We need that commitment to turn into a deliverable so that these companies can make bankable decisions." As demand and reliance on AI grows, perceptions around data centres have shifted. What was once seen as a commercial asset is now viewed as something of strategic importance. Australian Strategic Policy Institute deputy director Raelene Lockhorst believes the centres should be viewed as essential infrastructure. "Where we build data centres is now a national security decision, not just a commercial one," Ms Lockhorst said. "Northern Australia offers the combination that makes it the natural place to start: abundant land, renewable-energy potential, international cable connectivity, proximity to Indo-Pacific markets and rising strategic importance. "Rather than retrofitting this infrastructure into already constrained metropolitan areas, the north lets us build Australia's next generation of digital infrastructure where it strengthens both economic development and national resilience." Queensland Treasurer David Janetzki said proposed data centres in north-west Queensland could seek support for local energy solutions through the government's $200 million North West Energy Fund. But the treasurer would not provide a delivery date for the western section of CopperString, saying the government's immediate focus was the eastern link between Townsville and Hughenden. 'Trillion-dollar question' The United States Studies Centre said Australia's data centre sector had expanded considerably since 2020 and global demand for infrastructure was forecast to double by 2030. University of Queensland economist Flavio Menezes said guessing how long the investment boom would last was the "trillion-dollar question". "In 2023, $500 billion of the United States GDP … was data centres and the number keeps going up," Professor Menezes said. "Data centres are like the heavy industry of this century. "They produce the computing power that has become really the essential input for our digital economies. "It [investment] all relies on computing power, and that demand keeps going up … there will be a natural limit for that investment but, if you think about the next two, three, four years, it will keep going up." CopperString's western leg is managed by Queensland Investment Corporation and will rely on private capital to be completed. Professor Menezes said demand from data centres would help strengthen the business case for CopperString, but warned people to be wary of the drawback. "Data centres can bring a large number of benefits to the regional economy … the additional demand may make the case for CopperString make more economic sense as well," he said. "Done well, they can support the case for that connection … but it's important to remember benefits go to the wider community. "But there's hyperlocal costs in terms of pollution and competition for electricity. "I wouldn't want to live by one."