Key facts
- Australia has 162 data centres with plans for 90 more, attracting over A$155 billion in investment.
- Data centres require massive amounts of energy and water, raising concerns about grid stability, power prices, and water scarcity.
- Energy demands from data centres could triple by 2030, potentially leading to increased reliance on fossil fuels.
- Some data centres may consume up to 40 million litres of water daily, impacting supplies in drought-prone regions.
- New regulations will require large-scale data centres to underwrite power supplies and limit water use from 2027.
Australia is experiencing a significant boom in data centre construction, attracting substantial investment and positioning itself as a potential global hub for AI infrastructure. However, this rapid expansion is raising serious concerns among local communities and environmental experts regarding the immense energy and water demands of these facilities.
Residents in areas like Sydney's Lane Cove are already experiencing the impact of data centres, citing noise pollution and proximity to these large industrial buildings. With plans for 90 more data centres and over A$155 billion in investment, the scale of development is set to increase dramatically. Experts highlight that data centres are crucial for supporting the burgeoning AI industry, with Australia already having a high number of AI users and the potential to develop its own AI companies by hosting this infrastructure.
Despite the economic arguments for embracing data centres, environmental experts warn of significant challenges. The Australian Energy Market Operator projects that data centre energy demands could triple by 2030, potentially leading to higher power prices and a renewed reliance on coal and gas power plants, as renewable energy sources may not consistently meet the required scale and speed. Furthermore, the substantial water consumption of data centres, some using up to 40 million litres daily, poses a threat to water supplies in a drought-prone country, with Sydney Water estimating data centres could consume up to 25% of its drinking water by 2035.
In response to these concerns, Prime Minister Anthony Albanese announced new legal obligations for large-scale data centres, requiring them to underwrite power supplies, limit water use, and fund necessary water infrastructure from 2027. However, these regulations will only apply to new proposals. Environmental and community groups are advocating for a pause on all data centre development, questioning the sustainability of Australia's ambition to become a data centre capital and its potential impact on net-zero targets and water storage.