Data Centres: How Australia’s approach now, will shape the next five years of innovation

As these systems become more advanced, the large energy and resource demands of their physical infrastructure are key factors to consider along with their transformative potential.

In fuelling this demand in AI, Data Centres present a multi-billion-dollar opportunity with the chance to create new industries, supply chains and jobs. With international stakeholders highly valuing energy security and stable commercial, geological, political and economic access, Australia's data centre market is projected to grow 4x to over $26 billion dollars by 2030 from today driven by increasing demand.

However, if this infrastructure is scaled with limited innovation – they risk negative impacts on local communities, the environment and our electricity grid. In contrast, if Australia can lead the world in well-planned, resource and cost-efficient, socially licenced, environmentally friendly data centres, we give ourselves the best chance of securing a growing share of global investment and capitalising on the opportunity.  

Concern over the impact of the AI boom puts the climate, energy, and sustainability strategies of data centre developers in the spotlight.

‍What are Data Centres?

Data centres are pieces of storage infrastructure designed to hold rows of computer servers, outfitted with all the necessary equipment needed to keep them running as fast as possible and as long as possible to process data and run computations. This requires state-of-the-art HVAC systems for climate control, cooling systems for all the heat generated and nearly uninterrupted power supply with backup power generators to guarantee users have platforms running around the clock. The quality of uptime for these data centres isn’t measured by how many minutes or hours they run for, it comes down to how small the gap can be between running for 99% and 100% of every day. With 250+ data centres in Australia and 175-350 new builds expected by 2030, the demand for energy, heat management and water supply is only set to grow.

What are the risks?

The capacity of Australia’s energy grid is lagging behind data centre growth, placing stress on the grid, driving up utility prices, and increasing the risk of blackouts with economic losses for investors and users. While the all-essential computer servers comprise half the electrical footprint of a data centres, the other half is used powering all other systems (HVAC, cooling and security). The solution to combat this issue while maintaining the rush to get data centres online has led to many sites using fossil-fuel generators to fill the gap in capacity and guarantee uninterrupted power supply, in a time where the Australian government and global consensus emphasise a transition to renewables.  

The multiple systems involved in running data centres all constantly generate or relocate significant heat, requiring clean potable water or other cooling methods at a time where areas like Sydney already face water stress. Alongside this, the gutting and retrofitting of computer systems as new parts become available is set to produce large volumes of e-waste, thousands of tonnes of parts replaced every three years which can harm ecosystems without proper recycling or circular economy measures.

At a time when all these issues must be addressed and balanced, the most critical to data centre operators is social license and managing political risk to gain approvals for construction. The noise, heat, and emissions from operations can negatively affect nearby communities, undermining social licence. With loss of social licence, councils and governments may slow planning approvals, delay projects, increase compliance costs, and expose operators to political risk, including regulatory intervention or public opposition. But despite this, the opportunities for Australia are equally as clear.

Clear Opportunities

Data centres have clear capacity to be integrated into a renewable program, with Amazon planning to invest into three new solar farms in Victoria and Queensland. Circular economy programs for waste products like e-waste would significantly improve the utilisation of component lifespans, and responsible grid integration could be transferred to other energy-intensive and climate-critical industries, including heavy manufacturing, minerals processing, and industrial production, helping reduce emissions and improve operational efficiency.

The Australian government has officially labelled data centres as critical infrastructure, creating long-term safe directions for foreign and domestic investment, and significant employment opportunities for local communities, with an estimated 30,000 new jobs by 2030, alongside construction employment.

The path to net-zero chartered by the Australian government takes into consideration the significant benefits and challenges posed by data centres, requiring continuous power supply and generally consistent amounts of power from the grid. To this extent, the Government is working with states and territories, energy market bodies, network service providers and the industry to harness this growth and adapt to the rising demand for electricity.  

Reach out to partner with Greenhouse to turn data centre growth into climate-positive outcomes.