As digital data becomes an essential part of daily activities, from interacting with AI chatbots to generating multimedia content, the need for data storage and processing surges. Data centres, essentially large-scale warehouses filled with servers, are expanding rapidly due to the growing demand from artificial intelligence technologies.
Australia is poised to become a pivotal location for data processing, with over 260 operational data centres primarily located in Sydney and Melbourne, and many more in development. However, alongside this growth, there are rising concerns about the strain on electricity and water resources.
Industry Insights from the US and Australia
Recently, U.S. President Donald Trump highlighted concerns over AI data centres’ energy consumption, suggesting tech firms should build their own power sources to avoid raising utility costs for consumers. “They can build their own power plants as part of their factory, so that no one’s prices will go up,” he stated.
In Australia, Energy Minister Chris Bowen addressed the significant energy usage by data centres, suggesting the upcoming AI and data centre strategy would tackle this issue. “People who are building datacentres do need to build new energy to go with it, and that energy will be renewable,” he noted, emphasizing the need for energy flexibility and redundancy.
A coalition of energy and environmental groups, including the Clean Energy Council and Australian Conservation Foundation, suggested “public interest principles” for data centres, focusing on renewable energy investment and responsible water use. Adam Bandt, ACF’s CEO, remarked, “Big tech corporations should be forced to do their fair share so they don’t drain our resources.”
Impact on Australia’s Power Supply
Data centres currently consume about 2% of the national grid’s electricity, but this could triple within five years, according to the Australian Energy Market Operator (Aemo). By 2035, data centres might require 21.4 terawatt hours of power, closely matching the consumption of Australia’s four aluminium smelters. AGL, a key electricity provider, believes demand might even surpass Aemo’s forecasts.
Globally, data centre power demand is rising four times faster than other sectors, with larger hyperscale facilities becoming increasingly common. The International Energy Agency notes that a single hyperscale data centre can consume as much electricity annually as 100,000 households.
Influence on Electricity Prices
Dr. Dylan McConnell from the University of NSW warns that expanding data centre capacities will inevitably increase electricity costs, as more expensive energy resources are deployed. A report by Baringa for the Clean Energy Finance Corporation (CEFC) predicts that data centre growth could raise wholesale electricity prices by 26% in NSW and 23% in Victoria by 2035, primarily due to a reliance on gas peaking generation.
Julia Hinwood from the CEFC suggests that investment in renewable energy and storage could mitigate these effects. Data Centres Australia claims that 70% of their energy consumption is covered by power purchase agreements and onsite solar, with CEO Belinda Dennett noting the industry’s significant investment in renewable energy.
Challenges in Meeting Climate Goals
While Australia is advancing in renewable energy, Dr. McConnell cautions that the pace may not suffice to meet emissions targets, especially with increased demand from data centres. He warns, “If we are in a situation where demand is growing much faster than anticipated and renewables don’t keep up, then actually what we end up doing is just powering that new demand and not displacing coal.”
Government projections indicate an additional demand from data centres could slow down emissions reductions post-2035.
Water Supply Concerns
Data Centres Australia describes the sector as “modest water users,” advocating for reduced reliance on drinking water through innovative cooling and recycling methods. However, water authorities anticipate substantial demands on water supplies, forecasting Sydney’s data centre demand to reach 250 megalitres daily by 2035, comparable to Canberra’s total water usage. In Melbourne, applications for new data centres surpass the water demand of nearly all top business consumers in the state.
Original Story at www.theguardian.com