Residents in the Sydney suburb of Lane Cove say they can hear a constant hum coming from a data centre near their homes. One resident, referred to as Lucy, says she notices the noise most at night while putting her child to bed.
Four more data centres are planned for the same industrial park. Australia now has 162 data centres nationwide, with 90 more in the pipeline.
Investment in the sector has reached an estimated A$155bn. Earlier this year, OpenAI chief executive Sam Altman said Australia could become a global data centre hub.
One proposed facility in western Sydney would be Australia's largest single energy user at one gigawatt. In Marsden Park, construction is already underway on what would be the biggest data centre in the Southern Hemisphere, located just 100m from local homes.
Why Data Centres Are Expanding So Quickly
Data centres have supported online services like email and banking since the early internet era. Demand grew sharply after ChatGPT launched in 2022, driving a global race to build more capacity for AI tools.
Location matters because of latency, the time it takes data to travel between source and destination. Australia has around 13.6 million monthly AI users, ranking sixth worldwide.
Jon Whittle, a former CSIRO digital research director, says the government has little choice but to continue investing. He argues Australia avoided a recession partly because of the data centre boom.
Belinda Dennett of Data Centres Australia says the country appeals to investors due to available land, political stability, the Five Eyes security alliance, and a reliable energy grid.
Power and Water Supply Concerns
The Australian Energy Market Operator says data centre energy demand could triple by 2030. The Climate Council warns that without new renewable capacity, power prices in New South Wales could rise 26% by 2035.
Because data centres require constant power, some companies are turning to gas. Cloud Carrier plans three gas-fired power stations near Sydney to supply its facilities.
NSW Treasurer Daniel Mookhey says the investment boom is happening alongside renewable energy growth. He says private funding is replacing coal power without added cost to households.
Data centres also use large volumes of water for cooling, some facilities require up to 40 million litres a day. Sydney Water estimates data centres could use up to 25% of the city's drinking water by 2035.
In July, Prime Minister Anthony Albanese announced new rules requiring large data centres to secure their own power and limit water use. The rules, set for 2027, will only apply to future projects, not those already built or under construction.
In Lane Cove, deputy mayor Rochelle Flood says residents were not consulted before their suburb became a data centre hub. Business manager Felipe Tanaka says he has been told to relocate, a move he expects will cost jobs.
Mookhey says data centre jobs mostly come from companies that use the facilities rather than the sites themselves. Flood says residents have not been told what the local energy and water use is actually supporting.
