Sydney Councils Sound Alarm Over Datacentre Expansion Impacts
In a series of submissions to the New South Wales datacentre inquiry, multiple Sydney councils have voiced escalating fears about the rapid growth of datacentres, highlighting severe risks to community health, environmental stability, and local amenities. These concerns come as the industry expands unchecked, with councils reporting direct competition for land, increased power outages, and significant resource drains.
Power Grid Strain and Housing Displacement
Lane Cove Council, located on Sydney's northern shore, detailed a troubling rise in brownouts and blackouts in the Lane Cove West area, directly attributing these disruptions to the expansion of datacentres. The council emphasized that the noise from these facilities is not only disruptive to residents but also harmful to local wildlife, compounding quality-of-life issues.
Meanwhile, the City of Ryde highlighted a critical clash between datacentre development and housing needs. A cluster of twelve datacentres in Macquarie Park is directly competing with opportunities for residential projects in areas with strong public transport access. One proposed facility on Lane Cove Road, within walking distance of the Macquarie Park metro station, could have instead supported new homes in a strategically located, well-serviced precinct.
Water Supply and Environmental Concerns
Added pressure on local water supplies from datacentres is delaying approved housing projects, as Sydney Water struggles to meet the required capacity. Penrith City Council has urged the state government to pause further datacentre approvals until the short- and long-term impacts on utility services, including water and power, are fully understood.
The Western Sydney Regional Organisation of Councils warned that the cumulative effects of noise, heat, and emissions from datacentre clusters are often overlooked in individual project approvals. At scale, these impacts are significant, particularly in heat-vulnerable communities across western Sydney. Without coordinated planning, datacentre growth risks exacerbating existing pressures on electricity networks, water systems, and local environments, potentially constraining essential services needed for housing and infrastructure delivery.
Resource Demands and Industry Response
Jess Miller, deputy lord mayor for the City of Sydney, projected that if all proposed datacentres in the NSW planning portal are built, they would require approximately 4.4 gigawatts of power—equivalent to the electricity needs of 10 million households—and consume up to 25% of the city's drinking water by 2035. The additional water use is estimated at 250 million litres per day by 2035, matching the total production capacity of the Sydney Desalination Plant, which has indicated it could double capacity to mitigate supply risks.
Data Centres Australia acknowledged that the industry's electricity and water requirements are primarily for cooling, noting that compute processes generate heat like all electrical devices. The peak body stated that developers are investing in power purchase agreements for renewable energy and aim to reduce reliance on drinking water, but cited cost and supply barriers. They called for Sydney Water to make non-potable recycled water available at an affordable price to support this shift.
The industry has faced mounting pressure to address energy and water use concerns, with the federal government releasing national datacentre expectations in March. The NSW inquiry, with public hearings scheduled for May, will focus on effects on housing, land use, and local communities. The Committee for Sydney noted the state lacks an overarching spatial strategy for datacentre deployment, with increasing calls from communities and councils to ensure datacentres act as good corporate citizens rather than extractive entities.
