ASIA
17 September 2026
Decoding the datacentre debate
Data centres have existed for decades. So why are they so controversial now? This piece is a summary of a recent article by Johanna Lim.
Until recently, data centres attracted relatively little public attention. But over the past 12 months across Australia, data centres have become the subject of intense debate, especially for electricity and water usage, location and who benefits. Australia’s national government plans to legislate nationally consistent mandatory standards for large data centres by early next year.
Data centres have existed for decades. What has changed is their scale, purpose and the resources required to support their growth.
What are data centres? They are specialised physical facilities that house servers, networking equipment and data storage systems. They are foundational infrastructure for the modern digital economy.
The origins of data centres can be traced to the 1940s, when early computers were so large they needed dedicated spaces to house them. As computers became smaller, governments and businesses increasingly adopted their own IT infrastructure.
The internet then drove a shift towards larger co-location data centres in the 1990s, where multiple customers could rent space for their servers in a single shared facility.
Then came cloud computing. This provided customers with on-demand access to computing resources over the internet, and further accelerated the growth of data centres. In 2006, Google opened its first hyperscale data centre. Amazon Web Services also launched its first cloud computing services in the same year.
What was once a room or floor serving a single organisation evolved into massive dedicated facilities capable of supporting millions of users.
Australia’s own data centre market reflects this shift in scale. Australia currently has over 160 operational data centres, with most located in New South Wales and Victoria. There are at least another 90 facilities in the development pipeline.
The data centres now being proposed are also considerably larger than many existing data centres. The proposed 1.2 gigawatt Mamre Road Data Centre in Sydney would cover an area equivalent to the size of 52 rugby fields. If built to its maximum capacity, it would become Australia’s largest single electricity user.
Cloud computing and the growth of everyday digital activity initially drove the expansion of these large, centralised facilities. But since OpenAI launched ChatGPT in late 2022, AI has rapidly accelerated this growth. AI workloads are far more computationally intensive than traditional digital services. They are expected to account for approximately 70% of data centre demand by 2030.
Training advanced AI models requires dense arrangements of specialised chips working simultaneously to process large volumes of data. This can run continuously for weeks or months. Once trained, AI models also require computing power to respond to users.
A 2025 survey found 88% of organisations reported regularly using AI in at least one business function – an increase from 78% a year earlier.
The shift toward large-scale data centres is also about efficiency. They benefit from economies of scale, advances in facility design and more efficient use of energy, but the sheer scale and growth of demand mean their overall electricity consumption is still significant.
Data centres accounted for around 3% of electricity supplied through Australia’s main grid in 2025–26. This share is projected to reach 13% by 2035–36.
The growth of Australia’s data centre market is unlikely to slow anytime soon. Australia remains a competitive destination for data centre investment, with strong government support, continued interest from major technology companies and an estimated A$150 billion in data centre buildouts by 2030.
But community opposition is emerging as a significant risk for new developments. This opposition is, in part, because of the land, power and water data centres consume. But it’s also because there is uncertainty over whether the significant investment in AI infrastructure will truly generate sufficient economic returns – and who will benefit from those returns.
Data centres have existed for decades. What has changed is their scale, purpose and the resources required to support their growth.
What are data centres? They are specialised physical facilities that house servers, networking equipment and data storage systems. They are foundational infrastructure for the modern digital economy.
The origins of data centres can be traced to the 1940s, when early computers were so large they needed dedicated spaces to house them. As computers became smaller, governments and businesses increasingly adopted their own IT infrastructure.
The internet then drove a shift towards larger co-location data centres in the 1990s, where multiple customers could rent space for their servers in a single shared facility.
Then came cloud computing. This provided customers with on-demand access to computing resources over the internet, and further accelerated the growth of data centres. In 2006, Google opened its first hyperscale data centre. Amazon Web Services also launched its first cloud computing services in the same year.
What was once a room or floor serving a single organisation evolved into massive dedicated facilities capable of supporting millions of users.
Australia’s own data centre market reflects this shift in scale. Australia currently has over 160 operational data centres, with most located in New South Wales and Victoria. There are at least another 90 facilities in the development pipeline.
The data centres now being proposed are also considerably larger than many existing data centres. The proposed 1.2 gigawatt Mamre Road Data Centre in Sydney would cover an area equivalent to the size of 52 rugby fields. If built to its maximum capacity, it would become Australia’s largest single electricity user.
Cloud computing and the growth of everyday digital activity initially drove the expansion of these large, centralised facilities. But since OpenAI launched ChatGPT in late 2022, AI has rapidly accelerated this growth. AI workloads are far more computationally intensive than traditional digital services. They are expected to account for approximately 70% of data centre demand by 2030.
Training advanced AI models requires dense arrangements of specialised chips working simultaneously to process large volumes of data. This can run continuously for weeks or months. Once trained, AI models also require computing power to respond to users.
A 2025 survey found 88% of organisations reported regularly using AI in at least one business function – an increase from 78% a year earlier.
The shift toward large-scale data centres is also about efficiency. They benefit from economies of scale, advances in facility design and more efficient use of energy, but the sheer scale and growth of demand mean their overall electricity consumption is still significant.
Data centres accounted for around 3% of electricity supplied through Australia’s main grid in 2025–26. This share is projected to reach 13% by 2035–36.
The growth of Australia’s data centre market is unlikely to slow anytime soon. Australia remains a competitive destination for data centre investment, with strong government support, continued interest from major technology companies and an estimated A$150 billion in data centre buildouts by 2030.
But community opposition is emerging as a significant risk for new developments. This opposition is, in part, because of the land, power and water data centres consume. But it’s also because there is uncertainty over whether the significant investment in AI infrastructure will truly generate sufficient economic returns – and who will benefit from those returns.