Data centres are popping up all over Sydney. But what impact do they have on our suburbs?

If every data centre in the NSW Planning portal is built, their combined maximum power demands in western Sydney will climb to about 4.4 gigawatts in a decade.

That is equivalent to the average electricity load of more than 10 million households and, at their peak, they will demand almost four times as much power as the rest of the city.

And while it is unlikely they will all be operating at capacity at the same time, the figure reflects the scale of growth in the construction and operation of data centres in Sydney.

Data centres are dedicated IT infrastructure facilities, hosting items such as servers, storage and networking equipment, and are how users can easily access AI or streaming services.

And while there have been such facilities in Sydney since the early 2000s, the increase in usage and popularity of AI, alongside key operational services such as cloud computing, has meant there is greater demand for larger data centres with greater capacity.

The ones that have been completed will require huge amounts of energy and water to operate their facilities 24/7, putting pressure on systems already strained by population growth and climate change.

Over the next 10 years, large-scale data centres are set to be mostly concentrated in western Sydney, where as many as 14 large-scale data centres are seeking approval or have been approved for construction, including six in the Blacktown LGA.

While there will ultimately be more data centres outside western Sydney by 2036, they will account for far less power demand than those in the west, with their combined peak demands coming in at around 1.1 gigawatts.

The full list of major data centres operating or seeking approval in Sydney comes to 43, with many more smaller facilities dotting the city, reflecting the booming growth in the industry.

Dr Amr Omar, a research associate at the University of NSW, says there should be some concern at the exponential growth in data centres in Sydney, and their resource demands.

“It’s alarming for multiple reasons, including the clustering of these systems in one region,” he said.

“The issue is that if you’re going to cluster all of those systems in one location, you’re placing a heavy load on the grid. Local congestion becomes an issue, it creates bottlenecks. Farms and other industries will begin competing with these facilities for water and power.”

A spokesperson for Endeavour Energy, one of the two major providers in Sydney, said they believed that data centres could “increase load demand on the distribution network by around 25-30 per cent in the next five years.

“The typical size of data centres [is] increasing from an average of 30MVA [megavolt-amperes] just a couple years ago, to over 100MVA on average today,” the spokesperson said.

“The speed, scale and location of data centre growth are all key factors involved in network planning, and continued cross-sector collaboration will be critical in ensuring NSW remains globally competitive and an attractive place to do business.”

Their resource demand also extends to water usage, with Omar estimating that one megawatt of data centre usage equates to the water usage of 75 households. That means that, should the major data centres seeking approval in western Sydney open in the next decade, they will use the same water as about 330,000 households.

“This is a huge problem,” Omar said.

“Because it is not clear [if] we have enough infrastructure for so many. And my concern is that the resource demands of these facilities are so great, they will leave Sydney at risk.”

Despite the concerns, data centres remain key to future technologies, so authorities have been working with the sector and encouraging them to find sustainable solutions, such as emerging cooling technology (where one body of water continuously circulates throughout the system).

A spokesperson from Sydney Water said it was working to “understand the scale” of proposed data centre growth across the city, and was engaging with the sector to ensure “sustainable water supply can be delivered without impacting bills or service levels for our community.

“Sydney Water is exploring a range of servicing options to supply water to these proposed developments, including the provision of alternative water sources such as recycled water from wastewater treatment facilities and stormwater harvesting, alongside the rollout of smart metering to improve monitoring and efficiency,” the spokesperson said.

Planning Minister Paul Scully said the government was also working with the sector to improve its sustainability measures, emphasising how important these new infrastructure projects were to the future of the city.

“Sustainability is a key consideration in all data centre assessments as the Minns Labor government works with the industry to encourage both water and energy efficiency,” he said.

Industry figures point to the importance of data centres in the future of the NSW economy, including their integration in key sectors such as health and government. Data Centres Australia chief executive Belinda Dennett said that the construction of data centres was imperative if “Australia wants to participate in the next industrial revolution”.

“AI will change every industry – it is a general-purpose technology on a huge scale and trajectory,” she said.

“Jobs building the foundations of the AI era are the most sought-after roles globally and they will exist in our own backyard.”

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