AI data centres expand as communities fear rising costs

But the rapid expansion is raising questions about noise, energy use, water supplies and the environment.

Australia becomes a major data centre hub

The large size and constant noise of data centres are becoming difficult for some nearby residents to ignore. Some people compare the sound to a plane taking off, while others describe a continuous high-pitched noise.

Lucy, who lives in Sydney’s Lane Cove, says she often hears a constant humming when putting her child to bed. "I'll hear it and think, 'What is that? What is going on?'," she says.

The data centre is around 350 metres from her home, while four more facilities are planned at a nearby industrial park. The growing number of projects has made data centres a more common part of residential communities.

Australia has attracted major investment because of its land availability, energy resources and growing renewable power capacity. Earlier this year, OpenAI CEO Sam Altman said Australia could become a global data centre capital if it chose to pursue that opportunity.

The country already has 162 data centres, with another 90 planned. More than A$155bn in potential investment is estimated to be linked to these projects.

AI demand drives rapid expansion

If approved, a huge facility planned for western Sydney would have a capacity of one gigawatt. That would make it Australia’s largest single energy user.

Another major project is being built at Marsden Park in western Sydney. The facility is expected to become the biggest data centre in the Southern Hemisphere and is being constructed only about 100 metres from a local community.

Data centres have supported the digital economy for decades by storing and processing information. They were initially used for services such as email, online banking and cloud computing.

The rapid growth of artificial intelligence changed the industry after ChatGPT became widely popular in 2022. Companies then began competing to build more facilities capable of handling the enormous computing power required by AI systems.

The location of data centres has also become important because of latency, which refers to the time needed for data to travel between locations. Fast connections are essential for services such as air traffic control, robotic surgery and online entertainment.

Australia has around 13.6 million monthly AI users, making it the sixth-most active country for AI use globally. Experts believe local data centres could also make it easier for Australian companies to develop their own AI technologies.

Investment brings economic benefits

Belinda Dennett, CEO of Data Centres Australia, says the country could lose important economic benefits if it does not build its own infrastructure. "If we think about it in reverse, what happens if we don't build infrastructure here", Dennett says. "We get none of the value chain, we are just importing tools from someone else and we become just a user."

She also says Australia has several advantages for attracting international investment. "we've got availability of land, we've got political stability, and we've got the Five Eyes security alliance," Dennett says.

She added that the country has other strengths that could support the industry. "We've also got a skilled workforce, a pretty stable energy grid, and an abundance of renewable energy potential."

Business experts and economists argue that the data centre boom has provided important support to Australia’s economy. Some say the country could have faced a recession without the investment seen in the sector during the past few years.

Jon Whittle, a former director of the digital research centre at CSIRO and an AI and business expert, believes the government has little choice but to continue supporting the industry. "There's some very serious considerations around this, but my main message would be we need to lean into it," he says.

Power and water concerns grow

The rapid expansion is also creating concern among energy and environmental experts. They warn that Australia may struggle to meet the huge electricity and water requirements of new data centres.

The Australian Energy Market Operator estimates that electricity demand from data centres across the country could triple by 2030. Meeting that demand will require major investment in new power generation and energy storage.

The Climate Council has warned that without enough new renewable energy and storage, data centres could contribute to higher electricity prices. It estimates that power prices in New South Wales could rise by 26% by 2035 under such pressure.

Residents in parts of Sydney are also worried about the impact of new data centre clusters on nearby natural areas and waterways. The debate is increasingly focused on whether the economic benefits of the AI industry can be balanced with the needs of local communities.

Australia is gaining major investment from the rapid growth of AI data centres. The projects could support jobs, technology and new businesses, but they also need large amounts of electricity and water.

The biggest challenge will be finding a balance between economic growth and the concerns of people living near these facilities. Australia’s AI future may depend on whether it can expand the industry without putting too much pressure on its energy system, water resources and environment.

Also read: Pakistan’s largest data centre opens as PM Shehbaz unveils Sky47 AI cloud

Also read: NADRA Pak ID App’s ‘Block Biometric Data Access’ feature enhances user security