Tasmania’s renewable energy is being handed to an AI startup while local industry left waiting

The island state’s hydropower is a historical flashpoint. Just hark back to the Franklin Dam era.

The Tasmanian government is planning on handing hundreds of megawatts of hydro energy to Firmus Technology behind closed doors, while local industry waits in line. It is yet another Tasmanian – and Australian – story about who the government really serves.

Tasmania runs on water and luck. Around 90 per cent of its electricity comes from hydroelectric dams – a legacy that in the face of a drying climate and unpredictable rains cannot be taken for granted. That renewable grid is also tight. Not abundant and infinite. Tight.

So, when a Singapore-headquartered AI startup quietly secured a deal for 104 megawatts of Tasmanian hydropower – with plans to scale to 400 megawatts across three sites – it’s worth asking: how did that happen? And who gets left out?

That company is Firmus Technology, and its Project Southgate is shaping up to be one of the most consequential and least scrutinised energy deals in Tasmania’s recent history.

The deal nobody can explain

In late March 2026, Firmus CEO Oliver Curtis confirmed his company had locked in an agreement with state-owned Aurora Energy for 104 megawatts of hydro-electric power from Hydro Tasmania. The deal is central to Firmus’s pitch – both for its “green AI factory” campus in Launceston’s St Leonards suburb, and for its USD $5.5 billion IPO valuation and anticipated ASX listing.

The problem? Nobody outside the government seems to know what Firmus promised in return.

Tasmanian Greens MP Tabatha Badger has described the deal as “highly unusual”

“There’s never been any details on what exactly was promised to Firmus, or what Firmus was promising to deliver for the Tasmanian community.”

“So there’s been a lot of concerns, and we’ve been waiting for details of that deal.”

That opacity matters because a long line of companies were turned away from the same grid. Most pointedly: the Boyer Paper Mill, Australia’s only remaining newsprint manufacturer, employing hundreds of Tasmanians in New Norfolk, has been trying to electrify its coal-fired boiler. Its green transition would require an additional 45 to 60 megawatts. Hydro Tasmania told the mill there was no spare capacity.

Firmus, a company that recently moved its headquarters to Singapore, got 104 megawatts. Boyer Mill, which has operated since 1941 and employs hundreds, got a knock-back.

400 megawatts: bigger than everyone else

In budget Estimates in early June, Tasmania’s Minister for Energy confirmed that Firmus’s plans across three sites are expected to consume around 400 megawatts – more than any other major industrial consumer in the state. The Minister revealed this load is factored into the forward estimates, meaning Firmus is on track to become Tasmania’s single largest power consumer within four years.

To put that in perspective: the Launceston site alone is planned to eventually house 36,000 Nvidia GPU chips. The AFR reported the first stage would consume roughly 15 per cent of Tasmania’s entire electricity supply. This is not a modest pilot project. This is a bet-the-grid proposition, made without any meaningful public debate.

As Badger noted after the Estimates hearing, Tasmania has “no planning guardrails in place for AI and data facilities, and we have limited power.” Questions remain about whether the state can accommodate even more data centre proposals that are reportedly in the pipeline

The jobs don’t add up either

Firmus promises employment – between 50 and 100 full-time staff for every 50 megawatts of capacity, according to its own projections. But AI expert Professor Toby Walsh has publicly cast doubt on those figures, stating that modern automated data centres rarely require that level of labour. The company’s reliance on specialised liquid immersion cooling technology adds another wrinkle: the global pool of technicians trained to maintain it is, by most accounts, extremely limited.

So, Tasmania is being asked to hand over its most precious public resource – rain dependent, cheap, renewable baseload power – to a facility that may generate relatively few local jobs, operates largely for offshore cloud computing clients, and whose green credentials rest entirely on the same hydro grid that’s already too constrained for Tasmanian industry.

The grid that depends on rain, and is getting less of it

Here is the thing Firmus’s “renewable-powered” branding quietly papers over: Tasmanian hydropower is not a tap. It’s a weather system. And the weather is changing.

When the rains fail, Tasmania doesn’t generate enough electricity on its own. It often must buy it from the mainland via the Basslink interconnector cable under Bass Strait. That mainland power is not clean. It comes from the same coal-and-gas mix that powers most of the eastern grid.

The NEM data tells a stark story. In 2023–24, Tasmania was a net importer across Basslink for eleven out of twelve months –  the lowest hydro inflows since joining the NEM in 2006. The following year, 2024–25, it was a net importer again for ten out of twelve months, with below-average inflows every month from December through August. Hydro Tasmania’s CEO called it the worst multi-year drought in the company’s recorded history, and profit before tax collapsed 96 per cent – from $193.7 million to just $7.5 million.

This is not bad luck. This is a trend. CSIRO’s streamflow data shows 19 out of 25 Tasmanian hydrological gauges recording a statistically significant declining trend since 1970 – the highest proportion of any drainage division in Australia. Three-quarters of climate models project further rainfall decreases, particularly in spring. Hydro Tasmania’s own engineers have concluded that average inflows may be up to 10 per cent lower in future than the historical norm.

So “renewable-powered” means: hydro when it rains enough, and Victorian coal and gas when it doesn’t?!

Under climate projections, “when it doesn’t” will be more often. Adding 400 megawatts of constant AI load onto a grid that already imports for most of the year in dry periods is not a green energy story. It is a risk transfer – from a well-capitalised startup onto Tasmania’s public grid, Tasmanian households, and the climate.

This is happening everywhere, and it’s getting worse

Tasmania’s Firmus saga is not an isolated case. It’s a local variation of a national problem that is rapidly accelerating.

A new report by climate analyst Ketan Joshi for Greenpeace Australia Pacific, published in May 2026 and titled Energy Vampires, documents how the frenzied rollout of AI data centres across Australia threatens to derail the renewable energy transition entirely.

The report finds that data centres are heaping massive new load onto grids that are already straining to absorb renewables – meaning coal and gas generators run longer and shut down later, just to keep up.

“Impatience is not a virtue,” Joshi wrote.

“The reckless data centre buildout is heaping massive new load onto the grid, meaning renewables have to run harder just to stay in the same spot.”

The report also exposes a troubling alignment between the data centre industry and the gas lobby, with both sectors using the explosion of AI demand to justify new fossil fuel extraction. Joshi notes that many tech companies are deploying renewable energy credits and power purchasing agreements to greenwash their operations – claiming credit for renewable projects that were already built and would have proceeded regardless.

ABC’s Four Corners put the same story to a national audience this week, reporting on community opposition across the US to data centre construction over noise, energy use, and water consumption – and asking whether Australian governments and regulators can keep pace.

There are currently around 90 data centre projects in the pipeline across Australia. In NSW alone, approved, and proposed facilities total 11.4 gigawatts of potential demand, nearly four times the output of Eraring, Australia’s largest coal station.

Green (washing) is doing a lot of heavy lifting

Firmus markets itself relentlessly as a clean energy company. Its website describes Project Southgate as “renewable-powered” and talks about benefiting Australia. But renewable power is only as abundant as the grid it draws from. When a small island state with a constrained hydro system hands hundreds of megawatts to a foreign-headquartered AI company, the renewable credentials are essentially a greenwashing branding exercise built on public infrastructure.

The call is growing to have called for immediate regulatory guardrails – a moratorium on new approvals until proper planning frameworks exist, energy efficiency verification, and genuine transparency about what deals have been struck.

Those seem like the minimum. What we need is a proper public accounting of who benefits and who does not from this AI data centre rush.

Boyer Mill asked for 50 megawatts to stop burning coal and protect hundreds of Tasmanian jobs. The grid said no. An AI startup backed by Nvidia and Blackstone, incorporated in Singapore, asked for 104 megawatts to build a facility for offshore cloud clients. The deal was done before anyone could ask the question.

That’s not an energy policy. That’s a government choosing winners in secret and hoping nobody notices.

Louise Morris is an Advocate at the Australia Institute with 20 years’ experience encompassing climate, energy, forest protection, and law reform in the not-for-profit sector, and federal politics.