Australian utilities warn data centre demand risks pushing up household bills

In submissions to a New South Wales state parliamentary inquiry, the utilities said existing laws were insufficient to protect consumers from bearing the rising costs.

The submissions increase pressure on the government to set limits on how rapidly expanding data centre projects use electricity and potable water shared by local communities, with critics contending that careful planning has been pushed to the sidelines in the rush to secure a piece of the multi-trillion dollar global data centre boom.

Reuters previously ⁠reported that the state, home to Sydney and one-third of Australia's 27 million population, had approved 10 data centre projects from companies including Microsoft and Amazon without setting specific, enforceable parameters for resource consumption.

"Without appropriate policy settings, this growth could place pressure on electricity infrastructure planning, system reliability and ultimately consumer costs," Jason Krstanoski, an executive at grid operator Transgrid, wrote in a submission.

"This principle is non-negotiable - existing customers should not subsidise new large loads."

New South Wales Planning Minister Paul Scully said in an emailed statement that data centres were an "important part of the infrastructure and digital architecture of modern economies", and the government was committed to enabling their development responsibly.

"We have already been using planning controls to make sure data centres are delivering the water and power infrastructure they need to operate," Scully said.

Transgrid ‌has received ⁠connection inquiries from data centre developers totalling more than 10 gigawatts - more than half the state's current peak demand, according to data published by the energy regulator - in the past 18 months, the submission said.

Some individual facilities were seeking more than 1,200 megawatts, it said.

Meanwhile, the Water Directorate - which represents 92 council-run local water utilities across New South Wales - said there were "few places" in the state equipped to support the scale and pace of ⁠data centre growth without threatening water security.

Data centres typically rely on large volumes of water for evaporative cooling to prevent servers from overheating, although some use closed‑loop coolant systems or fans.

The Water Services Association of Australia said data centres were seeking water volumes far larger than most other customers.

If they ⁠use potable water that was earmarked for the public, "utilities will need to turn to the next available sources, which can cost billions more, to meet community needs, with those costs shifted onto household bills", the association's executive director, Adam Lovell, wrote in a submission.

"These energy ⁠and water utilities are sounding the alarm," said Abigail Boyd, an opposition Greens lawmaker who chairs the inquiry, which the party initiated in January.

"The public have the right to know what state and federal governments are signing us up for when they roll out the red carpet for these data centre businesses."

 ($1 = 1.4213 Australian dollars)