The East-West HVDC Supergrid

A modest proposal

Australia stands on the brink of two transformations: the clean energy revolution and the surge of artificial intelligence. By harnessing its vast open spaces and renewable resources, Australia is well-positioned to become a leading force for both clean energy and advanced computing. I’d like to propose an east-west high-voltage direct current (HVDC) supergrid that could redefine Australia's economy, its energy landscape, and its future.

The world is experiencing an explosive demand for compute—driven by AI, cloud services, and digital transformation across nearly every sector. This demand is only accelerating, and with it comes an unprecedented need for energy. Large-scale data centers and AI infrastructure are projected to account for as much as 8% of global electricity demand by 2030, and are the main driver of demand growth, in my view. Major US tech firms, such as Microsoft and Amazon, are already exploring partnerships in the UAE to secure reliable energy for their data centers because they simply can't get enough of it domestically, even after restarting the available nuclear plants (bees permitting). But Australia offers an even more ideal partnership—one that combines political stability, abundant renewable resources, and the space to build.

One of Australia’s greatest strengths is its extraordinary levels of insolation—the amount of solar radiation received per unit area. With some of the highest insolation rates in the world, particularly across its vast interior, Australia is uniquely positioned to harness solar power at an unprecedented scale. Australia's renewable energy capacity is expected to exceed 80% of its total energy mix by 2030, driven by large-scale solar and wind projects, making it a highly attractive partner for energy-intensive industries. With an east-west HVDC supergrid, Australia can offer the energy security that global tech firms crave, while creating an entirely new export product: green compute. By attracting tech giants to set up their next-generation data centers in Australia, we could turn our geographic and natural advantages into a significant economic contributor. This vision isn’t just about meeting domestic needs—it’s about positioning Australia as the go-to partner for clean, scalable compute power in the decades ahead.

Imagine this: a HVDC transmission line stretching all the way from Toowoomba in Queensland to Geraldton in Western Australia, spanning over 4,000 kilometers, cutting through the lower Northern Territory and northern South Australia. This east-west link would be the backbone of a new energy and technology corridor, powering Australia’s future growth and prosperity.

Although some of Australia's internal landmass is protected, much of it is already used for low-level economic development, including 3.5 million square kilometres for ultra-low headcount grazing (which is perfectly compatible with wind turbines and solar panels). Another 1.2m square km is classified as “minimal use”.

Pastoral areas and indigenous land councils should be invited to declare special economic zones, where large-scale, multi-gigawatt solar and wind energy installations could be established. These zones wouldn't just generate energy—they would become thriving hubs for data centers, the infrastructure needed to power AI development and digital services. The idea is bold but straightforward: behind-the-meter renewables are the most efficient way to power data centers. By connecting lots of SEZs together in an east-west band, the need for battery (already insanely cheap), pumped hydro and gas firming is reduced, making the total cost of electricity even cheaper. And excess power can be exported to the coasts.

Consider the opportunities: AI data centers have insatiable demands for energy, particularly for running inference processes, but they aren’t as dependent on ultra-high-speed bandwidth. This makes remote locations—like those along this proposed east-west route—ideal, as long as there’s abundant, low-cost power. These economic zones could host dozens of data centers, each powered by locally-generated renewables, creating a new, globally-recognized hub for AI and cloud services.

And we could expand this vision. Imagine we reach a scale where 10 separate installations each generate 10 or more gigawatts of renewable energy. We could then lay the foundation for a second HVDC line, this time running from Townsville to Port Hedland. This would create a north-south and east-west network, weaving together a national power grid that would reduce reliance on fossil fuels and inject life into underdeveloped regions.

This is more than just infrastructure. It's a reimagining of Australia as a leader in both clean energy and advanced computing. It's ambitious, and it requires bold policymaking, significant investment, and a true partnership with Indigenous communities. But the potential here is immense: thousands of new jobs, greater energy resilience, and a foundation for industries that will define the 2030s—clean energy and AI.

What the Government Can Do To Help

The current regulatory framework for electricity transmission in Australia is governed by the Australian Energy Market Operator (AEMO) and the Australian Energy Market Commission (AEMC). For an east-west HVDC supergrid to succeed, we need to rewrite the rules of the game.

Regulatory Changes

Currently, transmission approval processes take too long, and give too much airtime to embarrassingly stupid degrowthers. AEMO ensures the reliability and security of electricity and gas systems across Australia, while AEMC sets the rules for the National Electricity Market (NEM) and advises governments on energy policy. To make an HVDC supergrid possible, an Act of Parliament would be required to update the roles and responsibilities of AEMO and AEMC, drastically simplifying approval processes and allowing (low) fixed compensation to landowners..

Land Use Reforms

Land use reforms are another critical piece of this puzzle. We need to work in partnership with Indigenous land councils and local authorities to establish special economic zones along the route. This means updating existing land use legislation so we can rapidly designate these zones, ensuring that renewable energy projects and data centers can be developed efficiently.

This is about more than just land use—it's about respect and partnership. Indigenous communities must have a genuine voice in how these economic zones evolve, ensuring that cultural heritage is respected while economic opportunities are maximized. It's a partnership approach that will foster local support and ensure that the benefits are widely shared. Fortunately, data centres generate a great deal of money, and that can be used to soothe concerns of local communities.

Infrastructure Investment and Incentives

To attract the private investment needed to bring this vision to life, the government will need to put some serious incentives on the table. Grants, tax breaks, and low-interest loans can help kickstart renewable energy facilities and data centers along the HVDC route. Establishing a sovereign infrastructure fund could also help de-risk the project and attract international investment.

Once the key land rights are obtained, the actual build out can be scaled up or down to adjust to the evolving pace of demand for energy and compute. Unlike say, nuclear power stations, renewable and data centres can be deployed pretty quickly once the regulatory hurdles are cleared.

Paying for it

The price tag for an east-west HVDC supergrid would undoubtedly be hefty. We’re talking about AUD 30 to 50 billion—an investment of national significance. This figure includes the HVDC infrastructure itself, converter stations, and renewable energy generation facilities. With such a massive scope, these costs could be phased, making the financing more digestible and ensuring each stage can be optimized. It probably makes sense to work east to west, starting closer to population centres.

Australia’s superannuation sector represents an incredible pool of potential capital—trillions of dollars that could be leveraged to finance this vision. But to make it appealing, the project needs to offer stability, long-term returns, and a solid risk profile. Infrastructure projects like this can offer just that—predictable cash flows over decades, perfect for long-term investors like pension funds.

Derisking the Project for Private Investors

Data centres are pretty profitable, and AI companies have a lot of money, so I am not proposing that this project needs to be heavily subsidised. However there can be a case for derisking the buildout of transmission infrastructure at a higher rate than that which can be be contracted on day 1. One of the smartest ways to derisk a project like this is through Contracts for Difference (CfDs). Under a CfD, the government guarantees a minimum revenue for the power produced by the renewable facilities tied to the HVDC line. If market prices dip below the guaranteed level, the government covers the shortfall. If prices rise above that level, investors pay back the difference. This creates stability and predictability, making the project more attractive to investors.

In addition, government guarantees for key phases like construction and early operations could help manage risks associated with delays or cost overruns. Tax incentives—like accelerated depreciation on capital or exemptions during the initial operational years—could also enhance financial viability and broaden the investor base.

By smartly structuring the financing, leveraging superannuation capital, and using derisking tools like CfDs, the government can make this ambitious vision not only feasible but compelling for private investors. It’s about marrying public ambition with private opportunity, unlocking the potential of a true east-west HVDC supergrid and making Australia a global leader in the clean energy race.

Skill issues

These SEZs will need people - a lot of people. The interior of Australia is very sparsely populated, so how do we get the talent we need?

Imagine a string of desert cities rising along this HVDC corridor—functional, beautiful, and buzzing with life. Think of them as Australia’s answer to Dubai, but without the relentless car dependence. Desalinated water, while too costly for low-value agriculture, becomes economically feasible when used to supply urban centers, especially ones that are thriving and affluent.. These desert cities could have abundant green spaces, recreational swimming spots, and parks, turning arid landscapes into vibrant, livable hubs.

We could make these cities magnets for talent—places where people from all over the world want to live and work. Just as Dubai has reimagined the possibilities of desert living, these cities could offer high living standards, world-class infrastructure, and a direct connection to the exciting industries of clean energy and AI. Ideally, at least in my preference, these cities would also offer a healthy outdoors based lifestyle, with lots of opportunities to cycle and swim, with excellent rail connections. (There’s some evidence Dubai is starting to grasp this point, after a few decades of mall-based urbanism).

These cities wouldn’t just support industry; they’d be dynamic cultural and educational hubs. Universities, research institutions, and diverse communities could thrive here, attracting people who want to be part of something transformative. By building lush parks, sports facilities, and vibrant cultural spaces, these cities wouldn’t just attract talent—they’d retain it, creating a steady supply of skilled labor to power the economic zones.

Building these desert cities and SEZs would create an enormous amount of employment—both in the construction phase and in the longer term. We’re talking about thousands of jobs across sectors like renewable energy, data management, urban planning, and construction.

Once the facilities are up and running, thousands more permanent jobs would be created—jobs in energy management, AI, IT, and urban services. With a high quality of life on offer, these cities would make it easier to attract international talent, particularly those with specialized skills in renewable energy and data. By integrating residential, commercial, and recreational spaces, these cities would be more than just places to work—they’d be thriving communities driving economic growth and innovation.

By aligning clean energy abundance with the appeal of well-resourced urban living, Australia could create a new magnet for global talent. These cities could embody a vision of sustainable living, technological leadership, and economic opportunity, drawing people from across the globe to participate in Australia’s energy and AI revolution.

Criticisms

The Project is Too Expensive

One major criticism is that the east-west HVDC supergrid is just too costly. prudence.

True, this project is a significant investment. But Australia has, what, 3 trillion in superannuation? And this project is serving the AI industry, which is experiencing exponential growth and has a great ability to pay. Also, this would really kickstart economic growth across the country.

Environmental Impact on Desert Regions

Some may argue about the environmental cost of developing infrastructure and cities in fragile desert ecosystems. Critics might worry about disruption to these areas and the impact on local wildlife.

The design of this project will prioritize sustainability. Comprehensive environmental assessments will guide the development to minimize disruption. By concentrating development within designated economic zones, the project limits its overall footprint, allowing the vast majority of desert ecosystems to remain undisturbed. In fact, the renewable energy generated here will have a major positive impact—reducing carbon emissions and mitigating the broader environmental crises we face.

Indigenous Land Rights and Cultural Heritage

Concerns about Indigenous land rights and cultural heritage are critical. Critics may argue that such a project risks sidelining Indigenous communities and neglecting cultural ties to the land.

The only way this project succeeds is through genuine, respectful partnerships with Indigenous communities. Indigenous land councils will be central to the process, playing a lead role in shaping the special economic zones. This project isn’t just about economic opportunity; it’s about fostering a spirit of inclusivity, ensuring that Indigenous Australians share in the prosperity while preserving and respecting their cultural heritage. The important point is that for communities that don’t want the economic development, they don’t have to accept it. That’s why the line is 4000km long.

Attracting Talent to Remote Areas is Challenging

Skeptics may say that drawing skilled workers to remote desert cities is a tall order. The remoteness, the climate—it all seems like a hard sell.

But these aren’t just any remote areas. Australia’s colourful desert is really beautiful. The desert cities we envision are hubs of innovation, high quality of life, and opportunity—filled with green spaces, cultural amenities, and cutting-edge infrastructure. Think of them as modern cities designed for work, culture, and recreation. The combination of compelling job opportunities, government incentives, and a world-class living environment will draw talent. Plus, modern technology and connectivity mean that remoteness is less of a barrier than ever before.

Risk of Project Failure

A project of this magnitude inevitably raises questions about risk. What if it doesn’t succeed? What if the complexities and costs prove insurmountable?

Risk is part of any bold endeavor. But by breaking this project into manageable phases, working with experienced engineering partners, and using proven HVDC technology, we can mitigate these risks. Government guarantees and Contracts for Difference will help provide revenue certainty, and lessons learned from each phase will make subsequent phases smoother. The potential rewards are simply too great not to try.

Finally, what is the risk of doing nothing? Sit on the sidelines and wait for AI to disrupt every industry, and let Big Tech take all the spoils? Doesn’t sound like much fun to me. Australia has done risky, big projects before, like Snowy Hydro or Barrow Island. It can do it again.