Data centres are booming in Australia - but at what cost?

Australia has become a magnet for data centre money, and the scale is now hard to ignore. There are 162 across the country, 90 more planned, and an estimated A$155bn in investment waiting in the wings. If one huge project in western Sydney gets the nod, it would become Australia’s largest single energy user at one gigawatt.

That boom is being sold as a way to keep Australia in the AI race. Sam Altman has said the country could become a data centre capital of the world, and industry figures argue that building the infrastructure locally lowers the barrier for Australian AI companies. Belinda Dennett of Data Centres Australia says the alternative is blunt: import the tools and miss out on the value chain.

But the local reality is less glossy than the pitch deck. In Lane Cove, in Sydney’s lower north-shore, residents live with the hum of a nearby centre just 350m away, while four more are planned nearby. In Marsden Park, the biggest data centre in the Southern Hemisphere is already under construction only 100m from a local community.

The pressure points are obvious: power and water. The Australian Energy Market Operator says data centre demand could triple by 2030, and the Climate Council says power prices in New South Wales could rise 26% by 2035 without more renewable generation and storage. Water is just as fraught. Some centres can use up to 40 million litres a day, Sydney Water says data centres could take as much as 25% of the city’s drinking water by 2035, and the city may have to look to more expensive sources such as desalination.

The government is trying to get ahead of the backlash. Anthony Albanese has announced new obligations for large-scale data centres covering power, water use and extra water infrastructure, but only for future projects. For communities already facing noise, relocation and the loss of local businesses, that looks less like a plan and more like a promise that arrived late.