Australia’s data centre dilemma: energy boom or bust?
Jennifer Dudley-Nicholson |
Australia’s tech future hums and flashes inside hundreds of buildings across the country.
Drives perched on top of one another, stacked into racks and organised into long rows; the metal boxes delivering vital information, processing demands and answering artificial intelligence queries.
More than 270 data centres are operating or planned around Australia, reaching from Darwin in the north to Hobart in the south, and spanning Geraldton in Western Australia to Queensland’s Gold Coast.
But as the global race to establish more centres in Australia gains momentum, technology and environmental experts have questioned whether the nation can support their high energy and water demands.
If managed poorly, they warn, data centres could force up the price of electricity, strain Australia’s water supply and occupy land needed for housing.
But if planned well, the technology may deliver unexpected benefits, including more renewable energy projects, support for local innovation and employment in the tech sector and in regional areas.
Growing demand for Australian data centres was underlined recently by Microsoft, whose visiting chief executive Satya Nadella made a $25 billion, three-year commitment to building digital infrastructure Down Under.
It comes as Google reportedly weighs up a $20 billion investment, after Amazon pledged $20 billion to expand its local data centres.
CDC Data Centres has also announced a $3.1 billion facility for Sydney in addition to its existing 200MW campus at Eastern Creek, in the city’s west.
Australia’s biggest data centre developer, NextDC, also has a near-completed $7 billion facility in the suburb that will boast ChatGPT maker OpenAI as its anchor tenant.
Australia has become a magnet for AI infrastructure investments, UNSW AI Institute chief scientist Toby Walsh says, due to a mix of economics and geography.
“It’s a good business and Australia is a good place to host that business because we can run them on renewables, we’ve got plentiful land to build them on, we can serve not just the data needs of Australia but those of the Pacific Rim,” he says.
“There is benefit to us but it has to be done in a responsible way and we should be demanding that they all run on completely renewable energy, that they’re all water-zero, that they don’t use land that would be better used for housing or agriculture.”
While data centres provide quick access to processing power needed to fuel AI tools and other innovations, they also consume huge amounts of energy and water.
In a report, Oxford Economics Australia predicted data centres would grow at a rate of 25 per cent and consume 34.5 terawatt hours of power by 2050, or 12 per cent of energy in the National Electricity Market.
While estimates of their water consumption remain up for debate, Sydney Water calculates data centres could consume 25 per cent of its drinking supply by 2035.
Environmental concerns should not be dismissed in the name of innovation, Prof Walsh says, and developmental approvals should be scrutinised carefully.
“We should be driving a hard bargain and I’m not sure we’re driving a hard enough bargain now,” he tells AAP.
“Politicians love to stand in front of a new brownfield site with a spade and say we’re going to put a data centre here but we should think beyond just the announcement to the industry afterwards.”
To address concerns, the federal government released National Data Centre Expectations for new developments, designed to work alongside national, state and territory laws.
The five expectations range from supporting Australia’s renewable energy transition and using water sustainably to investing in local jobs and strengthening homegrown capability.
Adding environmental conditions to their development could ensure data centres bring fewer challenges to Australia, Clean Energy Finance director Tim Buckley says, and deliver unexpected upsides.
“It’s been really important that the federal government has said we want you to solve the problems you’re creating before we approve your projects,” he says.
“They can be clearly told if you bring your battery, your solar and your wind project and your (desalination) plant with you, the chance you’re getting approved is really high.”
If given clear renewable energy requirements, data centres could trigger a new wave of energy projects, Mr Buckley says, and provide the necessary financial support to encourage investments from other firms.
Amazon Australia, for example, recently signed nine power purchase agreements with battery projects and wind and solar farms, adding 430 megawatts of renewable energy to the grid.
“Data centres done right could actually be a big part of the solution for decarbonisation,” he says.
“I’d be happy to be a fanboy of data centres if they enable billions and billions of dollars in new infrastructure investment in decarbonisation.”
While energy and water usage remain a concern for many, Swinburne University engineering professor Mehdi Seyedmahmoudian says some issues can be solved by moving their location.
Not all data centres need to be built in cities, he says, and they can sit alongside renewable energy projects or water sources.
“One of the good things about data centres is they are manageable because we can locate them in different places in Australia,” he says.
“It’s not like transportation that you have to actually charge your car in urban areas.”
While building so many facilities in a short time could strain Australia’s workforce, Prof Seyedmahmoudian says it could also accelerate the transformation of our energy system and tech sector and ensure Australian research can be pursued and commercialised here.
“We can actually grow these technologies in our country, and we can be one of the world leaders rather than relying on international partners,” he says.
“Data centres, although they are putting the pressure on the grid, they are the essential parts of our energy digitalisation road map.”
AAP