Water demand to service data centres in Sydney alone is forecast to exceed the volume of Canberra's total drinking water within the next decade, as Australia rides the AI boom with dozens of new investments. Experts warn that these massive projects will strain already limited water resources.
In Melbourne, the Victorian government has announced a $5.5 million investment to become Australia's data centre capital, but hyperscale data centre applications already exceed the water demands of nearly all of the state's top 30 business customers combined. With 260 data centres operating and dozens more planned, concerns are growing about the impact on drinking water supplies.
Sydney Water estimates up to 250 megalitres a day will be needed to service the industry by 2035. Professor Priya Rajagopalan of RMIT University notes that water and electricity demands depend on cooling technology. Evaporative cooling causes water loss, while chillers require huge amounts of water to cool. Newer centres use water due to higher server rack density.
Some centres, like NextDC, are moving to liquid-to-chip cooling, which is more efficient. NextDC's modelling suggests power usage effectiveness could go as low as 1.15. However, even efficient facilities can use large quantities of water and energy at scale.
Sydney Water is exploring recycled water and stormwater harvesting to prepare for future demand. In Victoria, Melbourne Water has noted that hyperscale operators' projected demands exceed nearly all top 30 non-residential customers, and it has sought upfront capital contributions from companies to avoid burdening the broader customer base.
