Ehsan Noroozinejad from the University of Western Sydney explores how Australia is leading the way in creating data centers with a focus on the future.
Yesterday (March 23), the Australian federal government set new expectations of data centers and artificial intelligence (AI) infrastructure.
The message is simple: if companies want fast government approval, they must demonstrate that their projects exist Australia’s national interestsupport i switching to clean energyuse water responsibly, create local jobs, and build local skills.
The government says it will prioritize projects that are in line with those goals. Assistant Minister for Science, Technology and the Digital Economy, Andrew Charlton, said“We will do what is necessary to ensure the growth of AI is sustainable and supported by a strong public license”.
This is a big change. It means that data centers in Australia are no longer treated as another facility or technology investment. They are now considered large-scale infrastructure, with real effects on the power grid, water systems, land use and local communities.
What is a data center again?
Data centers are large buildings filled with computer equipment that store, process and transmit data. These sites help run cloud services, video calls, online banking, research and a growing wave of AI tools.
International Energy Agency says that an AI-focused data center can use as much electricity as 100,000 households. I the biggest ones being built today it can eat 20 times more than that.
When Australia emerged has more than 250 data centersthat number will grow as the AI boom continues. These institutions help power modern life and can bring jobs, investment and digital skills.
But critical infrastructure still needs public trust. And that trust will depend on whether these institutions pay their way, or nearby communities end up bearing hidden costs by putting more pressure on gas, water and scarce urban land.
Electricity is the first big problem
A report prepared by Australian Energy Market Operator found data centers in Sydney already use about 4pc of electricity supplied by the New South Wales grid. By 2030, that could rise to 11pc.
Nationally, i Clean Energy Finance Corporation it says data centers could account for 11pc of Australia’s total electricity consumption by 2035.
The same report says Australia will need an additional 3.2 gigawatts of renewable electricity generation and 1.9 gigawatts of battery storage by 2035 to contain rising prices and avoid additional emissions.
That doesn’t mean data centers are automatically bad for the power system. In fact, they can help fund new renewable energy, storage and grid development if the surrounding regulations are right. But that is the important point: if the laws are right and the government enforces them.
Water is the second issue
Not all data centers use the same amount, because water demand depends a lot on their cooling systems and which water source they use. But water will no longer be treated as a side issue.
A Australian Water Services Association a report on data center water use in Australia says estimates for Sydney range from about 1.9pc of water supply in 2030, to about 15–20pc in 2035.
The question of water is not just a local one. Australia’s water utilities say current data center usage is still low, but future facilities are likely to be much larger, as developers seek 5 to 40 million liters per day. One industry standard sets current usage less than 0.1pc of Australia’s total water supply, but future demand will depend on cooling and water source choices.
Hence the new organization’s expectations: data centers must use water efficiently, work proactively with utilities and communities, use potable water when possible, pay their share of infrastructure costs, and report water use transparently.
Then there is the world
Many data centers are attracted to big cities because they require strong power, fiber links, water, site access and, in some cases, proximity to end users. But that also means they often compete for the industrial world
In New South Walesthe industrial area is already under pressure and is needed for logistics, urban services, jobs close to home and the construction supply chains that help deliver housing.
In January, NSW established the parliamentary inquiry into data centres. It looks at electricity demand, grid impact, water use, drought risk, noise, heat, traffic, land use conflicts and whether data center resource demands are interfering with the supply of new housing.
It also asks who gets the benefits, who bears the costs and how transparent the approval process really is. In other words, NSW already treats data centers as a matter of public interest. Other states may need to follow suit, because federal expectations alone cannot resolve federal planning and land use disputes.
What can we expect from the new federal policy?
At best, the new expectations should dispel the idea that any data center is a good data center just because it brings private investment.
If the government sticks to its rules, new data center projects must bring their own clean energy or help finance it. They should use water responsibly and, where possible, use recycled or non-potable water. They should create real local jobs and skills. And they must be transparent about their energy, water and environmental performance.
The way forward is not to ban data centers – Australia will need more of them. The answer is to be very selective about where they go, how they are powered, how they are cooled and what they bring back.
If they are critical infrastructure, they must meet the same test as any other major infrastructure: they serve the public, not just the market.
Ehsan Noroozinejad
Ehsan Noroozinejad is a senior researcher and futures lead at the Urban Transformations Research Centre, of University of Western Sydney. He specializes in smart and sustainable design and holds a position at UBC Smart Structures in Canada. As the director of the Resilient Structures Research Group, Dr. Noroozinejad has led major developments in the field of structural engineering alongside a respected international research team. His contributions have been recognized with many national and international awards and accolades.
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