Hobart’s Eastern Shore residents are closely watching the evolving debate surrounding Firmus AI’s ambitious plans for three large-scale “AI factories” in northern Tasmania, as the State Government recently released draft expectations for data centre developers and a new planning decision was made for one of the sites. While the facilities are located hundreds of kilometres north, concerns over their significant energy and water demands have statewide implications for grid stability and household power bills.

Just last week, on September 7, 2026, the Tasmanian Government published its draft “Expectations for Data Centres and AI Infrastructure” framework, open for public consultation until October 12, 2026. This move aims to guide responsible development, requiring proponents to “bring on additional renewable energy generation,” “meet their share of network and connection costs,” and “manage water use responsibly.” This follows a decision on September 7, 2026, by the Latrobe Council to refer Firmus’s proposed 52-megawatt (MW) Wesley Vale AI factory to a state assessment panel, rather than making a local decision.

Firmus, an Australian company that commenced operations in Tasmania in 2019, is developing three major AI facilities under its “Project Southgate” initiative.

  • St Leonards (Launceston): A $2.1 billion facility is already under construction and is expected to be operational in early 2027. This site is planned to scale up to 300 MW.
  • Bell Bay (Long Reach, George Town): The George Town Council reluctantly approved plans for a 288 MW facility on the former Gunns pulp mill site on August 25, 2026, despite significant community opposition.
  • Wesley Vale (Latrobe): Plans for a 52 MW facility on the former Wesley Vale Pulp Mill site were filed on September 2, 2026, with public submissions closing on September 9, 2026.

Combined, these three “AI factories” could demand over 400 MW, with some estimates reaching 444-450 MW, potentially representing up to 25-30% of Tasmania’s current total energy use. This substantial demand has raised questions about grid strain and who will bear the cost of necessary network upgrades. Energy Minister Nick Duigan has stated that new developments are expected to support additional renewable energy generation, cover their connection and network costs, and maintain overall grid stability. Firmus claims its facilities are designed to be “dispatchable,” meaning they can reduce electricity demand during periods of energy scarcity or network constraint to help stabilise the grid.

Water usage has also been a contentious issue. Firmus states its AI factories are designed for minimal water consumption, primarily using dry cooling for most of the year and rainwater harvesting. For the Wesley Vale site, average annual cooling water consumption is forecast at 448 kilolitres. However, a controversy erupted in July 2026 when Firmus inadvertently published information suggesting it would “likely use Tas Irrigation” water for Wesley Vale, a system primarily intended for agricultural use. Tasmanian Irrigation clarified it had made no such commitment, and any such application would require government and community consideration. Firmus has since released an Australian Water Stewardship Policy outlining its commitment to minimising cooling-related water use.

The potential impact on local power prices for households and businesses, including those on the Eastern Shore, remains a key concern. Modelling by Baringa and the Clean Energy Finance Corporation (CEFC) suggests that if data centres are not matched with new renewables and storage, Tasmania could see a 2% increase in wholesale electricity prices by 2030, escalating to a 22% increase by 2035. The Climate Council has also warned that unchecked data centre growth risks pushing up power bills and climate pollution nationally, with energy demand projected to triple by 2030.

Despite these concerns, the Tasmanian Government, including Premier Jeremy Rockliff, has welcomed the investment, viewing data centres as an opportunity for economic growth and job creation. The recently released draft “Statement of Expectations” is intended to ensure that this growth benefits the state while protecting essential services. In parallel, Tasmania’s Parliament launched an inquiry into AI data centres on August 5, 2026, with submissions closing on September 21, 2026, to scrutinise the sector and recommend any necessary legislation or regulation.

While wholesale electricity prices in Tasmania actually fell by 39% to an average of $86/MWh in the second quarter of 2026, partly due to increased battery installations, the Australian Energy Market Operator (AEMO) has also predicted that electricity demand will “mushroom” further in coming months as more large data centres connect to the grid. This ongoing tension between economic opportunity and potential strain on public resources means Eastern Shore residents, like all Tasmanians, will continue to monitor how these large-scale digital developments are managed to ensure a stable and affordable energy future.