Data centres forced to pay their own way under reforms

The NSW government has implemented new rules requiring data centre builders to fund their own water and energy needs, in a move aimed at meeting community expectations. Builders will face clear expectations in terms of energy, water and environmental standards, community consultation, and infrastructure contributions to receive fast-tracked assessments.

The independent pricing regulator will review water charges for data centres, while the AI Office will continue examining public investment in artificial intelligence. Over 60 data centres are currently operating or under construction in NSW, with concerns about these facilities, particularly in Sydney where large, windowless, energy-intensive buildings are built near residential areas.

Treasurer Daniel Mookhey described the policy as nation-leading, stating that it ensures responsible investment and that data centres must 'pay their own way' by contributing additional power and water to offset their demands and help alleviate the burden on households. The guidelines for these reforms will be reviewed after one year.

In times of drought, the framework has protected household water supply by encouraging data centres to use recycled water. Energy Minister Penny Sharpe emphasized that data centres, which could account for 11% of state energy usage by 2030, must adhere to high renewable energy standards, enter into agreements for renewable energy, and cover the cost of network connections.