Australia Putting Its Limited Water Supply At The Service Of Explosive AI Datacenter Growth, Because Technologeeeeee [View all]

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As Australia rides the AI boom with dozens of new investments in datacentres in Sydney and Melbourne, experts are warning about the impact these massive projects will have on already strained water resources. Water demand to service datacentres in Sydney alone is forecast to be larger than the volume of Canberra’s total drinking water within the next decade.

In Melbourne the Victorian government has announced a “$5.5m investment to become Australia’s datacentre capital”, but the hyperscale datacentre applications on hand already exceed the water demands of nearly all of the state’s top 30 business customers combined. Technology companies, including Open AI and Atlassian, are pushing for Australia to become a hub for data processing and storage. But with 260 datacentres operating and dozens more in the offing, experts are flagging concerns about the impact on the supply of drinking water.

Sydney Water has estimated up to 250 megalitres a day would be needed to service the industry by 2035 (a larger volume than Canberra’s total drinking water).

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In its submission to the Victorian pricing review for 2026 to 2031, Melbourne Water noted that hyperscale datacentre operators that have put in applications for connections have “projected instantaneous or annual demands exceeding nearly all top 30 non-residential customers in Melbourne”. “We have not accounted for this in our demand forecasts or expenditure planning,” Melbourne Water said. It has sought upfront capital contributions from the companies so the financial burden of works required “does not fall on the broader customer base”. Greater Western Water in Victoria had 19 datacentre applications on hand, according to documents obtained by the ABC, and provided to the Guardian.

EDIT

https://www.theguardian.com/environment/2025/dec/04/thirsty-work-how-the-rise-of-massive-datacentres-strains-australias-drinking-water-supply