a■ Australia is capitalizing on the AI boom, with numerous new investments in data centers located in Sydney and Melbourne. However, experts caution about the strain these large-scale projects may impose on already limited water resources.
The projected water demand for servicing Sydney’s data centers is anticipated to surpass the total drinking water supply in Canberra within the next decade.
In Melbourne, the Victorian government has pledged a $5.5 million investment to transform the city into Australia’s data center hub. Currently, hyperscale data center applications already exceed the collective water demands of nearly all of the top 30 business customers in the state.
Tech giants like Open AI and Atlassian are advocating for Australia to evolve into a data processing and storage hub. With 260 data centers currently operational and numerous others planned, experts express concern regarding the repercussions for drinking water resources.
Sydney Water projects that it will require as much as 250 megalitres daily to support the industry by 2035—more than the total drinking water supply in Canberra drinking water).
Cooling Requires Significant Water
Professor Priya Rajagopalan, director of RMIT’s Center for Post Carbon Research, points out that a data center’s water and energy requirements are largely dictated by the cooling technology implemented.
“Using evaporative cooling leads to significant water loss due to evaporation, while a sealed system conserves water but requires substantial amounts for cooling,” she explains.
Older data centers typically depend on air cooling. However, the increased demand for computational power means greater server rack densities, resulting in higher temperatures. Hence, these centers rely more heavily on water for cooling solutions.
Water consumption in data centers varies significantly. For instance, NextDC has transitioned to liquid-to-chip cooling, which cools processors and GPUs directly, as opposed to cooling entire rooms with air or water.
NextDC reports that while initial trials of this cooling technology have been concluded, liquid cooling is far more efficient and can scale to ultra-dense environments, improving processing power without a proportional increase in energy consumption. Their modeling suggests that the power usage efficiency (PUE) could decline to as low as 1.15.
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The data center sector measures its sustainability using two key metrics: water usage efficiency (WUE) and power usage efficiency (PUE). These metrics gauge the levels of water or power consumed per unit of computing work.
WUE is calculated by dividing annual water usage by annual IT energy usage (kWh). For instance, a 100MW data center that uses 3ML daily would yield a WUE of 1.25. A number closer to 1 indicates greater efficiency. Certain countries enforce minimum standards; for example, Malaysia recommends a WUE of 1.8.
Even facilities that are efficient can still consume substantial amounts of water and energy at scale.
NextDC’s last fiscal year’s PUE stood at 1.44, up from 1.42 the previous year. The company indicates that this reflects the changing nature of customer activity across its facilities and the onboarding of new centers.
Calls to Ban Drinking Water Usage
Sydney Water states that estimates regarding data center water usage are continually reassessed. To prepare for future demands, the organization is investigating alternative, climate-resilient water sources like recycled water and rainwater harvesting.
“Every proposed connection for data centers will undergo case-by-case evaluations to guarantee adequate local network capacity. If additional services are necessary, operators might need to fund upgrades,” a Sydney Water representative said.
In its submission to the 2026-2031 rate review in Victoria, Melbourne Water observed that hyperscale data center operators seeking connectivity “expect instantaneous and annual demand to surpass nearly all of Melbourne’s leading 30 non-residential customers.”
Melbourne Water mentioned, “This has not been factored into our demand forecasting or expenditure plans.”
The agency is requesting upfront capital contributions from companies to mitigate the financial burden of necessary infrastructure improvements, ensuring those costs do not fall solely on the broader customer base.
Documents show that Greater Western Water in Victoria has received 19 data center applications. See more from ABC provided to the Guardian.
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The Concerned Waterways Alliance, composed of various Victorian community and environmental organizations, has expressed concerns regarding the potential diversion of drinking water for cooling servers when the state’s water supplies are already under stress.
Alliance spokesperson Cameron Steele emphasized that expanding data centers would create a greater reliance on desalinated water, thereby diminishing availability for ecological streams and possibly imposing costs on local communities. The group is advocating for a ban on potable water usage for cooling and demanding that all centers transparently report their water consumption.
“We strongly promote the use of recycled water over potable water within our data centers.”
Closed Loop Cooling
In hotter regions, like much of Australia during summer, data centers require additional energy or water to remain cool.
Daniel Francis, customer and policy manager at the Australian Water Works Association, highlights that there is no universal solution for the energy and water consumption of data centers, as local factors such as land availability, noise restrictions, and water resources play significant roles.
“We constantly balance the needs of residential and non-residential customers, as well as environmental considerations,” says Francis.
“Indeed, there is a considerable number of data center applications, and it’s the cumulative effect we need to strategize for… It’s paramount to consider the implications for the community.”
“Often, they prefer to cluster together in specific locations.”
One of the data centers currently under construction in Sydney’s Marsden Park is a 504MW facility spanning 20 hectares with six four-story buildings. The company claims this CDC center will be the largest data campus in the southern hemisphere.
Last year, CDC operated its data centers with 95.8% renewable electricity, achieving a PUE of 1.38 and a WUE of 0.01. A company representative stated that this level of efficiency was made possible through a closed-loop cooling system that does not require continuous water extraction, in contrast to traditional evaporative cooling systems.
“CDC’s closed-loop system is filled only once at its inception and functions without ongoing water extraction, evaporation, or waste generation, thereby conserving water while ensuring optimal thermal performance,” the spokesperson noted.
“This model is specifically designed for Australia, a nation characterized by drought and water shortages, focusing on long-term sustainability and establishing industry benchmarks.”
Despite CDC’s initiatives, community concerns regarding the project persist.
Peter Rofile, acting chief executive of the Western NSW Health District, expressed in a letter last June that the development’s proximity to vulnerable communities and its unprecedented scale posed untested risks to residents in western Sydney.
“This proposal does not guarantee that this operation can adequately mitigate environmental exposure during extreme heat events, potentially posing an unreasonable health risk to the public,” Rofile stated.
Source: www.theguardian.com
