While data centres have been around for decades, development is accelerating, with a wave of data centre proposals drawing community attention and concern. This increase is driven by the rapid rise of AI, strong expectations about future digital demand and a desire to capitalise on the economic gains. It creates both opportunity and substantial risk to households and communities. The risks include inefficient investment, higher long-term costs for water and energy, potential delays to the transition, and unacceptable impacts on energy and water services.
While properly regulated and well-integrated, data centres can help support a broader digital economy and contribute to energy system efficiency, flexibility, and reliability. This requires a robust framework to be developed and implemented upfront.
That’s why our submission to Infrastructure NSW’s Data Centre Consultation Paper recommends development of a comprehensive regulatory framework, and shift in the way data centre projects are assessed to focus on all aspects of their potential impact and public value. This includes:
- Assessments that consider the full impact of a project on the community beyond rubbery headline figures on jobs or investment;
- robust and transparent community engagement requirements;
- linking energy and water efficiency standards to development approval;
- disclosure requirements that assess and mitigate impacts on system loads;
- matched renewable energy requirements;
- measures to ensure neutral cost impact on energy and water consumers, and;
- operational obligations to support system reliability, affordability and emissions reduction.
What’s next?
A NSW Parliamentary inquiry is also considering these issues, alongside similar investigations at a Commonwealth level, and by the Australian Energy Market Commission. We’ll continue engaging in these processes to help ensure data centre development involves the community, and happens in a way that meets their needs and protects their interests.
