OpenAI's S7 data centre drops plan to cool it with recycled water after permit snags

OpenAI has abandoned its plan to cool its S7 data center in Sydney, Australia, with recycled water after facing permit hurdles. Instead, the company switched to a closed-loop liquid cooling system. The S7 facility, one of the world's largest data hubs, was initially intended to use Sydney's treated wastewater for cooling, reducing reliance on potable water and lowering energy consumption.

However, the developer, NextDC, struggled to obtain permits for a dedicated wastewater pipeline, leading to a change in strategy. OpenAI and NextDC had previously signed a Memorandum of Understanding in December 2025, with OpenAI set to utilize a portion of the data center's capacity, with the potential for future scaling. While the closed-loop system uses no drinking water, it will likely consume more electricity, a concern as Sydney's grid operator warns of transmission capacity constraints due to data center demand.