Queensland Premier David Crisafulli has vowed to fight a federal push to force large data centres to use renewable electricity – instead launching his own bid to attract more investment.

Developers will be blocked from building data centres near homes, schools or prime agricultural land as part of a national agreement with the states that Prime Minister Anthony Albanese is struggling to land.

Albanese will detail further obligations for data centres in a speech to the Business Council of Australia annual dinner later on Tuesday, ahead of a showdown with Crisafulli at national cabinet on Wednesday.

As well as requiring data centres to add more renewable energy to the grid than they take out and to minimise water use, they will also have to lessen community impacts by being appropriate for their size and avoiding sites that could be used for housing instead, under the federal government plan.

That could put an end to proposals like one for in Macquarie Park in Sydney’s north, where developer NextDC is trying to build a data centre next door to a metro station.

The City of Ryde has strongly objected to the proposal, saying it would result in underutilisation of transport infrastructure and undermine attempts to reduce the housing shortfall.

It comes after a report from the Australian Energy Market Operator revealed on Tuesday that Australian data centres will use five terawatt hours of energy in 2025-2026, or about 3 per cent of all energy from the grid, the report found.

AEMO predicts their will rise by almost seven times to 34 terawatt hours by 2035-2036, representing 13 per cent of grid power – or as much power as all homes in NSW and Victoria use today.

The energy market operator said the number of data centres in development since last year had more than doubled from 97 to 225.

In his speech, Albanese will say Australia must harness the positive opportunities of AI while minimising the downsides.

“Australia is in a strong position to attract investment in data centres, but maintaining social licence will be essential,” he will say.

“That means ensuring energy bills do not rise, water security is maintained and locations are appropriate.

“Getting this right can ensure Australia is the infrastructure partner for our region, aided by our status as a Five Eyes partner.”

Albanese has pledged to introduce mandatory requirements for AI and data centres in early 2027. Wednesday’s meeting with state and territory leaders is the next step to get national agreement on the standards.

But Crisafulli will push back on requirements for data centres to use renewable energy, arguing it would drive away investment and push up power bills.

The Queensland government is developing its own approach, which will allow data centres to use gas and coal power, as well as requiring them to provide a social impact assessment and sign agreements with local councils.

“We are technology agnostic. And by doing so, we will be able to bring on all forms of energy,” Crisafulli said on Monday.

The Northern Territory has also previously pushed back on plans to require data centres to invest in additional renewable energy resources.

Business Council chief executive Bran Black has welcomed Albanese’s front-footed approach to AI.

In a separate speech to the Business Council dinner, Black will argue Australia must not lag behind the rest of the world in adoption of AI and other innovative technologies.

Tracking AI adoption will be part of a national roadmap he will unveil at the event to make Australia a top-10 investment destination and fix the nation’s falling productivity and living standards.

-with AAP