Climate Council Report Highlights Risks
A new report from the Climate Council warns that the rapid expansion of data centres in Australia could cause electricity prices to rise by up to 26% in New South Wales and 23% in Victoria by 2035 if the demand is met with gas instead of renewable energy.
The report, titled 'Clouded Future: Managing Risks of the Data Centre Boom', highlights Australia's status as a global investment hotspot for data centres, second only to the USA in 2024. Currently, the country hosts 162 operational data centres with over 90 projects planned.
Unchecked growth in data centre demand may lead to a 14% increase in climate pollution from the main electricity grid by 2035. The report also anticipates a threefold rise in energy demand from data centres by 2030, equating to the power use of all homes in Victoria.
Impact on Resources
Water demand from data centres is expected to triple by 2030 as the climate becomes hotter and drier. Water utilities have received requests for single-site connections to use up to 40 million litres daily, equivalent to 16 Olympic swimming pools.
Australia could see severe impacts from this growth if proactive measures aren't taken. Simon Currie, Co-founder and Chief Projects Officer of Energy Estate, is developing data cable networks to support the AI economy, illustrating the need for sustainable energy solutions.
The Climate Council suggests that government intervention is crucial to align data centre growth with Australia's renewable energy goals. New data centres should be required to match their power usage with low-cost renewable energy sources and storage solutions.
Dr. Thomas Nann, CEO of Allegro Energy, emphasises the importance of adopting long-duration energy storage technologies to support this growth. He points out that such innovations are vital to mitigating climate pollution.
Professor Priya Rajagopalan from RMIT highlights the significance of sustainable building design in reducing environmental impact. Her work in energy benchmarking and climate change adaptation provides insights into managing the challenges posed by data centre expansions.
Sabiene Heindl, CEO of The Energy Charter, emphasised the importance of collaborative efforts, stating, "The lesson from the energy transition is clear: we get better outcomes when sectors work together rather than in isolation."
Last updated: 3 June 2026, 8:37 am
