Originally published by Joseph Carbone of The Australian.
27.09.2026
Australia is hurtling towards a high-stakes collision between its artificial intelligence ambitions, and a fragmented national energy market plagued by poor policy, according to the market’s top energy analyst.
Energy security and reliability are now playing a crucial part in the sovereignty of the nation’s critical infrastructure and protecting Australian data – highlighted by last week’s revelations of a rogue OpenAI agent breaching Sevices Australia.
MST Financial senior energy analyst Saul Kavonic says the end of the “peace dividend” of the past half-century means supply chains need to shift from ‘just-in-time’ thinking to ‘just-in-case’.
“You do not want our national security information, our top secret information, even the information which is tangential to our national security agencies, sitting offshore where you don’t have control over it,” he told The Australian. “Given what’s going on globally … you’ve got to have a minimum sovereign capability at home so that some foreign power doesn’t have the ability to turn this off.
“You turn off the data centre to a hospital, large parts of the hospital stop functioning. You turn off the data centre to an airport, air traffic control stops functioning.”
Mr Kavonic appeared at The Australian Energy Nation Forum detailing how, during a bushfires emergency, responders lost access to key satellite imaging which was under US government control.
“The US government took it away from us in the middle of our emergency,” he told the Sydney forum. “They didn’t do it maliciously. But, if we can’t rely on our closest ally to provide digital and AI services to us in a crisis, it means we have to have that sovereign capability at home.”
The significant hurdle in building out digital infrastructure required to both protect Australian interests and invite more international capital is an overly-complicated investment landscape, said Mr Kavonic. Driven by a ham-fisted approach to energy policy which has favoured an expensive renewables sector with significant lead times over the established oil and gas industries which gave Australia a place on the global stage, local and foreign businesses are increasingly looking to invest elsewhere.
“There is no one policy that has been a death knell for investment in Australia,” said Mr Kavonic. “It’s been a constant, having a plethora of small changes that overall create a much more hostile environment.
“It’s incompetence in policy detail, and the incompetence in policy detail permeates everything in energy now. So much discretion is given to government bodies and ministers that you don’t have rules in which the market can work.”
Mr Kavonic pointed to the failures of a sluggish Capacity Investment Scheme and the massive blowout on Snowy Hydro 2.0 to indicate the federal Labor government struggles to organise projects for 2030 targets the nation is already doomed to miss.
“You let government do something that the private sector could do, and it’s double the cost. Who pays? Aussie taxpayers, Aussie energy users. That’s why prices keep getting more volatile,” he said.
“We currently have the most pro-renewables government in Australian history, and yet utility-scale solar and wind installations are dropping to record lows next year.”
The apparent friction between Energy Minister Chris Bowen and data centre tsar Andrew Charlton is starting to show, said Mr Kavonic. And, if Australia doesn’t figure out its plans for data centres soon, it could miss out on a huge economic boon.
“In early 2025, you were hearing from Chris Bowen’s department an open hostility to data centres because it would see energy demand rise and put the nail in the coffin of them being able to maintain their 2030 targets.
“Now, what’s happened is you’ve had other parts of the government, Andrew Charlton’s been one of the leading voices, saying ‘no, this is super important for the economy and for national security and technology’, and that’s forced a pivot of view within (the Department of Energy), where there’s still a reluctance.
“Until we cannot get clarity on policy, until they’re willing to come clean that the 2030 targets are dead … it’s very hard for the energy department to say, ‘Okay, here’s a plan’.
“We’ll miss the boat if we’re going to stay on the status quo.”
