LATROBE, TASMANIA – Plans for a major artificial intelligence (AI) factory at Wesley Vale are currently under scrutiny by the Latrobe Council, with a vote expected in October. The proposed 52-megawatt (MW) facility by Firmus AI, located at 226 Mill Road within the former Wesley Vale Pulp Mill precinct, has ignited a local debate concerning its potential impact on North-West Tasmania’s electricity grid, water resources, and the cost of network upgrades.
The Wesley Vale development application (L-DA066/2026) entered public exhibition through Latrobe Council on August 26, 2026. Latrobe Council Mayor Peter Freshney has expressed concerns that current legislation may not be adequately suited to assess complex technology projects with significant environmental and economic implications. Mayor Freshney plans to discuss with colleagues the possibility of requesting Tasmania’s Planning Minister, Kerry Vincent, to grant the project “major project” status, which would shift the decision-making to the Tasmanian Planning Commission.
Firmus AI, an Australian company, is pursuing three “AI Factories” across northern Tasmania as part of its broader “Project Southgate” initiative. In addition to the proposed Wesley Vale site, a $2 billion facility is already under construction near Launceston (St Leonards), expected to begin operations in early 2027 with an initial capacity of 104 MW, scaling to 300 MW. A second facility, proposing around 288-300 MW, has received conditional approval from George Town Council for the Bell Bay industrial zone, though this decision faces an appeal from local residents.
The combined energy demand of these three sites could reach at least 444 MW, representing approximately 25 per cent of Tasmania’s total power supply. Energy Minister Nick Duigan confirmed in June 2026 that Firmus’s plans for around 400 MW are factored into forward estimates, potentially making the company Tasmania’s largest single power consumer within four years. Minister Duigan has stated that new load will necessitate new renewable generation, with the government working with the Commonwealth on forthcoming legislation to address this.
Firmus maintains that its AI Factories are designed for energy efficiency, using direct-to-chip liquid cooling technology that requires “almost no water for cooling”. The company claims its St Leonards site will use about 3.3 million litres annually, comparable to a typical restaurant’s consumption. Firmus also states it pays fair market rates for power and funds the transmission upgrades required for its sites. For the Wesley Vale site, Firmus is investing in upgrades to the adjoining TasNetworks 110 kV substation to support its connection.
However, the company faced scrutiny in July 2026 when it briefly indicated on its Wesley Vale FAQ page that it might use water from the state-owned Tasmanian Irrigation network due to a lack of TasWater service in the area. This reference was subsequently removed, and Tasmanian Irrigation confirmed it had made no commitment to Firmus. TasFarmers chief executive Nathan Calman has voiced concerns about diverting irrigation water from agricultural use and called for clear planning and resource rules before such developments become entrenched. In August 2026, National Cabinet agreed to develop nationally consistent mandatory standards for data centres, addressing water use and land-use impacts, with legislation expected in early 2027.
The impact on North-West power prices and jobs remains a point of contention. Firmus projects over 175 full-time operational roles across its northern Tasmanian sites, alongside hundreds of construction jobs. Co-CEO Oliver Curtis estimated approximately 20 ongoing jobs for the Wesley Vale facility. However, AI expert Professor Toby Walsh has publicly questioned these figures, suggesting modern automated data centres typically require less labour. While some argue that large industrial users like Firmus could help spread fixed grid costs, potentially lowering prices for residential and small business customers, others, including Greens MPs, fear that the substantial new energy demand could strain the grid and lead to higher power prices if not adequately offset by new generation. Prime Minister Anthony Albanese has indicated that new national AI laws will aim to protect power prices.
A Tasmanian Parliamentary Inquiry into AI Data Centres is currently accepting submissions until September 21, 2026, specifically examining Firmus’s request for a long-term 450 MW electricity arrangement from Hydro Tasmania, which the state-owned generator indicates would require additional generation.