Sydney's data centre boom fuels local fears of competing for water

Construction of such facilities approved without measurable plans to cut water use

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The authorities in Sydney approved construction of data centres without requiring measurable plans to cut water use, raising concerns that the sector’s rapid growth will leave residents competing for the resource.

The New South Wales state government, which presides over Australia’s biggest city, green-lit all 10 data centre applications it has ruled on since expanding its planning powers in 2021, from owners such as Microsoft, Amazon and Blackstone’s AirTrunk, documents reviewed by Reuters show.

The centres would bring in A$6.6 billion (S$5.6 billion) in construction spending, but would ultimately use up to 9.6 gigalitres a year of clean water, or nearly 2 per cent of Sydney’s maximum supply, the documents show.

Fewer than half the approved applications gave projections of how much water they would save using alternative sources.

State planning law says data centre developers must “demonstrate how the development minimises... consumption of energy, water... and material resources” but does not require projections on water usage or savings.

Developers need to disclose what alternative water supplies they will use, but not how much.

The findings show that the authorities are approving projects with major expected impact on public water demand based on developers’ general and non-measurable assurances as they seek a slice of the US$200 billion (S$256 billion) global data centre boom.

The state’s planning department confirmed that the 10 approved data centres collectively projected annual water consumption of 9.6 gigalitres — enough to fill about 3,840 Olympic-size swimming pools — but noted that five of those outlined how they expect to cut demand over time.

The department did not identify the projects nor comment on whether their water reduction plans were measurable.