Today during Question Time, Abigail asked the Minister for Climate Change what the government is doing to ensure that the rapid expansion of data centres and their enormous energy, water and land demands, do not undermine the renewable energy road map, delay urgently needed housing developments, or drive up power bills for consumers.

Abigail said:

My question without notice is directed to the Minister for Climate Change. Data centres in Sydney currently consume 2.6 terawatt hours of electricity per annum, which is around 4 per cent of New South Wales's grid‑supplied electricity. That is expected to nearly triple to 11 per cent by 2030 and reach 18 per cent by 2050, which is as much as an extra two Tomago aluminium smelters worth of energy demand on the network. Data centres are enormously energy intensive, consume massive amounts of water and have increasingly expanding footprints, consuming and displacing available land. Increasingly, hyperscale data centres such as the ones proposed to be built around Sydney will be directly transmission connected, avoiding cost recovery contributions under the road map. What is the Minister doing to ensure that data centre proposals and their resource demands do not jeopardise the renewable energy road map, delay new housing developments or drive up consumer power bills while benefiting from favourable Government policy settings?

The Hon. PENNY SHARPE (Minister for Climate Change): It is a very good question, because there are real challenges here, and the Government is looking at all of them. As the member knows, replacing our ageing energy grid and the energy generation that we get currently from coal‑fired power stations is the central tenet and requirement of the energy road map. Data centres are also essential infrastructure for the digital economy, but they come with significant energy and water challenges. They use a large amount of energy and electricity, as the member has indicated, and sometimes—although there are differing designs—they have issues around water.

The member might be interested to know that, as of June 2025, there are an estimated 195 data centres in Australia, 92 of which are in New South Wales. Most of those data centres are in metropolitan Sydney. As of July this year there are 14 data centres going through the planning process, and a further nine are preparing environmental impact statements. Most current projects will not require an environment protection licence from the Environment Protection Authority. But I think the point of the question the member asked is this: How does the Government think that is going in relation to its road map? How do we want to attract the investment that also comes with data centres? That is something we are actively working on.

There are a lot of conversations across government. The member could ask the Treasurer about this as well, because he is right into it. We are really trying to come to grips with the question that the member is asking about how we can do both: how we can make sure that we have the amount of renewable energy that we need, how we can make sure that we are at the forefront in relation to data centre development, and how we can balance the needs of that in terms of water and energy use. I do not have a magic answer for the member today, except to say that it is something the Government is actively considering. It factors into all of the projections and modelling that we are doing in relation to the road map.

A lot of work is occurring with data centres and data centre proponents who are looking to invest in their own renewable energy generation that can be used for data centres and can also be put into the grid more generally. I think that model is increasingly going to be used because of the issues the member has raised. Data centres are a massive opportunity for New South Wales. They do not come without challenges. In the energy space, nothing comes for free. We have to work through all of those issues, but we are doing that. When we are not disturbed by those opposite who are questioning net zero, we are actually doing pretty well. New South Wales had a really great plan in the energy road map. We are not only looking at data centres but also dealing with increased demand generally. It is not just driven by data centres. All of that factors into our modelling which we adjust on the way through.

Abigail went on to ask a further question:

I ask a supplementary question. I thank the Minister for her answer. There was a lot to cover in that question, and she has done well to answer it. I ask the Minister to elucidate on one part of her answer. Given that the centres will be directly transmission connected, is the Minister contemplating doing anything to ensure that they contribute to cost recovery contributions under the road map?

Abigail later spoke during a take note debate on the Minister's response:

I take note of the answer given today by the Minister for Climate Change. Data centres in Sydney currently consume 2.6 terawatt hours of electricity per annum, which is around 4 per cent of the State's grid‑supplied electricity. By 2030 that is expected to nearly triple to 11 per cent, and to reach 18 per cent by 2050, by which time data centres in Sydney are expected to consume 17.2 terawatt hours of energy annually. That is as much as an extra two Tomago Aluminium smelters' worth of energy demand on the network.

The Australian Energy Market Operator has this year updated its electricity demand forecasting methodology to include explicit reference to the growing energy demands of data centres. Data centres are enormously energy intensive, consume massive amounts of water and have increasingly expanding footprints, consuming and displacing available land. Increasingly, hyperscale data centres, such as the ones proposed to be built around Sydney, will be directly transmission connected, avoiding cost recovery contributions under the renewables road map. In the United States, energy-hungry data centres are sending electricity bills skyrocketing. Bloomberg News analysis found that in the United States, wholesale electricity now costs as much as 267 per cent more for a single month than it did five years ago in areas located near significant data centre activity, with the costs being passed on to consumers.

In 2022 it was revealed that power companies had warned developers in London, in the boroughs of Hillingdon, Ealing and Hounslow, that the availability of electricity capacity would stall new homes, with electricity connections not available for their sites until 2027 to 2030. The City of London declared the lack of capacity was due to a rapid influx of data centres. Further analysis claimed there would not be capacity for new electricity connections in the boroughs until 2035. Earlier this year Tower Hamlets Council—also in London—admitted there was a severe risk that house building at scale is unable to proceed for potentially 10-plus years due to lack of available electricity capacity as a result of more than 20 data centres now operating on the Isle of Dogs, chosen for its proximity to Canary Wharf and access to water for use as a coolant. A 2023 study by the council found as much as 75 per cent of all electricity demand in the area was coming from data centres, versus 16 per cent for offices and 6 per cent for homes.

The increasingly clear social and environmentally harmful impacts of energy-intensive data centres will only get more pronounced. Governments around the world, including here in New South Wales, have fallen for the hype hook, line and sinker and are relying on a supposed productivity boom on an AI-powered Hail Mary. Billions of dollars of investment are going towards those products, which are increasingly used to drive advertising, deepfakes and misinformation—a far cry from the lofty goals their promoters claim. And if the best and most ambitious goals of those companies are achieved, it will result in mass job losses and profits siphoned offshore, never to be seen by domestic taxpayers, all while we cook the planet and displace socially productive development, including much‑needed housing supply. We need real leadership at the moment, and I fear that is currently in short supply, with a Premier and Treasurer all in on an AI-supercharged boosterism that will leave us all paying the price.

Read the transcripts in Hansard here and here.

21 October 2025