AI company Firmus will become Tasmania’s biggest power user if three planned sites come to fruition

Tasmania would become Tasmania’s biggest electricity user if its ambitions to establish three “AI factories” in the state come true.

Singapore-based Firmus Technologies is building an AI factory in St Leonards, outside Launceston, which is expected to be operational early next year.

The factory will include data center infrastructure and specialized computers that will use graphics processing units to generate “AI tokens” needed for tools such as ChatGPT, a generative AI chatbot, Farmus said.

Now, the Tasmanian government has revealed plans for Farmus to build two more AI factories.

Energy Minister Nick Dugan said in response to questions from the Green Party in his budget estimates earlier this month that Farmus wanted to locate facilities in Belbay, north of Launceston, and Wesley Vale, in the north-west of the state.

Farmus also plans to build facilities in Melbourne, Sydney, Perth and Canberra.

Farmus says it’s still evaluating the site.

Latrobe Council told the ABC it had received a development application for the Wesley Vale proposal and that its planning team would need to assess the document before the application could be submitted to council.

The council understands that Farmus intends to use part of the old paper mill site.

Farmus confirmed its interest in building in these areas, but did not answer questions about whether it had purchased the site of an old pulp and paper mill.

“Site selection will be determined by access to electricity, transmission connections, planned routes and alignment with government policy.”

Many AI companies are increasingly looking to Australia as a place to build infrastructure because of its access to renewable energy, and Mr Farmus said Tasmania was considered particularly ideal because of its cold climate, which requires less air conditioning.

TasICT, which champions Tasmania’s technology sector, said AI infrastructure would benefit the state.

“Tasmania is experiencing a digital economic boom, with more and more technology being used in all sectors and jobs becoming increasingly reliant on technology,” CEO Russell Kelly said.

But he said that for AI companies to gain a social license for their facilities, they will need to be transparent with a public that typically does not trust AI.

Concerns about the power needed for AI factories

Farmus has signed a 104MW contract with state energy company Aurora to power the St Leonards AI factory via hydro energy, but the government says it will not affect electricity prices for residents.

Questions have previously been raised about how Farmus was able to secure so much power when the Boyer Paper Mill near Hobart currently uses 100 megawatts and is unable to secure an additional 45 megawatts to install electric boilers.

Dugan dismissed the comparison.

“Mr. Boyer continues to have discussions with Hydro about power. It’s not about the availability of power, it’s about the pricing of power,” he estimated.

Dugan said Farmus will need a total of about 400 megawatts to power the three sites, making it the state’s largest electricity consumer.

Energy consultants said 400 megawatts would represent about 20 per cent of the state’s current energy use and more than the demand of all Tasmanian households combined.

The Green Party is concerned about “huge” electricity demand.

“Where exactly the electricity for all these factories is going to come from remains a huge question,” said Tabitha Badger, Green Party MP for Lyons.

Aurora Energy and Hydro Tasmania did not disclose the price Farmus was paying for its electricity, but said the company was paying the “market price”.

The state government acknowledged that energy demand is high.

“However, the loads proposed by Farmus are scalable across the three sites and the final installed capacity is subject to meeting regulatory approvals and reaching commercial terms with energy companies, which is ultimately a matter for the proponent to decide,” a government spokesperson said.

Expectations for new renewable energy coming online through data centers

The federal government released a national AI plan in December with hopes that AI companies building data centers would not put upward pressure on energy prices and bring new renewable energy online.

Mr. Farmus previously said it would have a similar effect.

Co-CEO Oliver Curtis told 936 ABC Hobart in March: “We’re proud to have signed a very large energy contract with Hydro, but at the same time we’re supporting the construction of new renewable projects.”

Badger said this raised further questions about “what does renewable energy look like and where are these projects going?”

She wants state-by-state regulation.

Badger said laws could regulate the amount of energy and water provided to AI companies and require them to employ a certain number of residents in construction and ongoing jobs.

The Tasmanian government said it supported the national AI plan, including its hopes for data centres, and was actively involved in its development.

“This expectation works in parallel with existing legal and regulatory frameworks and is intended to guide responsible investment in AI-related infrastructure,” the spokesperson said.

“The Firmus development will have to go through the same planning and environmental approval processes as any other project, including an opportunity for community input.”

Farmus plans new fiber optic cable to mainland

Earlier this month, Farmus announced it would partner with Subco to build an undersea fiber optic cable between Tasmania and mainland Australia. This is the first new cable in more than 20 years, and the company said it will significantly increase the state’s digital capacity.

If approved, the company plans to begin operations in the second quarter of next year and expand to the wider SMAP submarine cable project linking Sydney, Melbourne, Adelaide and Perth.

TasICT said the new cable will bring many benefits to the state.

“It’s not every day that a company offers to build a bridge across Bass Strait,” Kelly said.