Does Australia have the energy and water to power the AI data centre boom?

ABC Listen, podcasts, radio, news, music, and more. Artemis II is GO, the first human mission to the Moon in more than 50 years. And we are following every step of the journey, from lunar flyby to splash down in a special daily season of science fiction called Artemis Explained. Join me, Belinda Smith, for mission updates so you know what's happening and why it matters. It's Artemis Explained. Search for science fiction on ABC Listen or wherever you get your podcasts. Australia is in the middle of one of the biggest infrastructure booms it has ever seen. And most people have no idea it's happening. The world's largest technology companies are queuing up to build enormous facilities here, facilities that will consume staggering amounts of power and water. And the decisions being made right now about where that energy comes from, will shape our electricity bills, our emissions targets, and our clean energy transition for decades. So what is actually being built and what will it cost us? My name is Ray Johnston, and welcome to download the show on ABC Radio National. [Music] Now joining me to unpack everything data centers, Australia's energy situation, and why it all matters to you. We have Petra Stock, who is a climate reporter at the Guardian, who has also been reporting recently on data centers. Petra, welcome. Ah, thanks for having me. And we have Dr. Bronwood Combo, researcher and lecturer at the UTS Transdisciplinary School. Welcome Bronwyn. Hi, thanks for having me. Now before we can talk about Australia's energy situation overall, I think we need to understand what we're actually dealing with here when we talk about data centers, and what we're actually dealing with here. And we're also dealing with data centers, which are really important to you. But AI has changed the scale of what they need to do. So Petra, can you explain what a data center is for someone who's never really thought about where the internet lives? Our online lives, they're increasingly reliant on digital data, you know, whether it's asking an AI chatbot a question or transcribing online meeting. But there are actually physical places and infrastructure where processing and storing of all this data happens. And data centers are part of that. So they're really just giant warehouses, kind of stacked with servers, computing equipment, lots of cabling. And you usually quite sophisticated cooling systems, because anyone who's streamed a show in HD on their laptop can know when you are using your computer in a confined space, they generate lots of heat. So those cooling systems are basically keeping everything cool. So the centers and the equipment can operate efficiently. Right. So not only are they using a lot of power, but they're also needing to call themselves in some meaningful way. So I'm assuming that's water. They generally use either electricity, such as air conditioning or water to keep those centers cool, which is part of their reason we're starting to see a big growth in energy use, but also water use in association with data centers. Now how does AI change this picture? Is running an AI tool meaningfully different to doing a Google search in terms of what it demands from these facilities? So the facility is different if they're specifically for running AI. AI does really change the picture in that it amplifies the intensity of everything. So AI chips and processing require a lot more energy, a lot more water, just the whole process is a lot more resource intensive. And that's partly because of the way the processing happens, so the chips are kind of when the servers are organized differently because they have to do much more complex modeling to produce the query responses that you're looking for. So for instance, if you put in a chat, chibi, tea query, or ask to create a meme of a cat, the complexity of the model to put that together and produce something for you does rely on AI. And so that's a lot more processing, a lot more materials, a lot more chips, a lot more water, a lot more energy. I've seen some numbers floating around previously about how much energy a single prompt, or how much water a single prompt into something like chat, chibi, tea, or Claude actually uses. Do we have any real figures on that, or are they all just guesses at this point? The MIT review actually did a study on this. They wanted to understand how much energy AI videos, just short five minute videos, might create. In the conversation article I wrote, there's one little cat video that's running for a few moments, and that was using 940 watt hours, which is about the same amount of energy as running a microwave for over an hour. Now that's okay if it's just one person, but there's millions of people making similar requests all the time. So that's where that kind of cumulative impact of this AI reliance, but also AI recreation starts to come into play. Right. And how many data centers does Australia currently have? What does it look like right now out there, Petra? So statistics from data centers Australia suggest there's around 250 either in development or already operating. And most of those are in Sydney or next biggest hub is Melbourne. So obviously these things have been around for some time. You know, we have used digital data. We have had data centers for decades, but what's changing is the rapid pace and scale of how many and how large these data centers are and how many new ones are being developed. So do we have access to information about how much power is being used by data centers right now? The environment of reporting on data centers is fairly slim. We do have access to estimates. So for instance, the Australian Energy Market Operator has estimated that currently all data centers are using around 2%, which has projected to increase to about 8% to 12% by 2035. But in terms of the actual energy they're using, public access to that information is hard to access that information. Also, for example, the International Energy Agency has done quite a lot of analysis on data centers globally. And one pretty shocking statistic that I read from them was that one of these large, what they call hyper-scaler data centers, which is a center built sort of specifically for AI, can use as much energy as 100,000 households. So it's really significant. And what are we expecting to happen in the future? We were looking at what was it 250 data centers either currently built or going to be built. Do we have any idea of what the data center landscape is going to look like in the next 10 years or is that just something that's impossible to predict at this point? AEMO is forecasting that data centers could use more power than all of the electric vehicles across Australia within five years. So it's kind of like quite a significant source of demand. Within 10 years, the data center industry could be consuming as much as 21 terawatt hours of power, which is roughly the amount of power that Australia's for aluminium smelters currently use. So it's pretty huge. And then we have some energy companies like AGL who are suggesting that the power demands may even outstrip those forecasts. So we really don't know, but it does seem like a lot of energy. Can I just add something to that? We also have this issue of phantom demand. So this is where data center developers purchase an industrial site to build a data center and they negotiate with the power companies and the water managers, like so it might be transgrid or endeavor energy or Sydney water in the case of New South Wales. So to get the resources they need to build this data center and then depending on that and the investment they get, they'll build it if it's approved. But there's no guarantee there's so many things that happen along the approval pathway that are within an outside their control that this estimate that they're going to build in terms of and what they require in terms of energy won't amount to anything. It might not happen. And so that's a real struggle for the current energy providers who are trying to work at how to cater to this incredible demand, particularly if you look at places like Western Sydney where you've got these clusters of data centers emerging as placing immense pressure on the grid because of the high concentrations of data centers. They're trying to work out how to cater to the demand in that specific area, but it's hard to do that when you can't really forecast accurately. They'll have to build new infrastructure energy infrastructure for that water infrastructure for that. And without knowing the exact amounts, they don't want to invest these billions of dollars to do that, or they want some kind of security or certainty from the data center industry, but it's hard for them to provide that either because it is a bit of an economic gamble for them. So there's a bit of a chicken and egg problem in terms of the infrastructural development going on in as a consequence of data centers. It's not really just building a data center, you're building an entire water and energy infrastructure to support it. And when we're talking about just building a data center, it's not just a little shed out in someone's backyard. Some of these individual projects being proposed are enormous and Bronwyn, I know your research has looked specifically at the Australian data center pipeline. Could you give us a sense of the scale of what is actually being planned here? How big are these centers? So a couple of years ago, data centers were relatively small and really a blip on the energy landscape. The last couple of years, the size and data centers are usually measured in terms of energy use. So megawatts, the size of data centers increased. They've gone from like 10 to 20 megawatts centers up to 100. And now we're seeing 500, 700, 800, a thousand megawatt data centers being proposed. And that's partly to cater to the demand for AI or the projected demand for AI. The Australian government is pushing for data sovereignty and digital sovereignty. And that's where we house all our data in data centers. So these big warehouses on Australian soil. And that means that this data is managed by our own laws. So we don't have issues with overseas data centers and privacy and things that might emerge if the data center and the data is outside our control. But the other issue is that these industries bring in a lot of money. So we're talking $100 billion of investment plans. So did you say $100 billion? Yes. Okay. Estimated for the next five years. So these are huge projects, billion dollar projects. And so there's a lot of money in this industry. And the Australian government wants to bring that in because it really does strengthen the digital economy. It provides jobs in the AI service. It enables us to do our work. We need these data centers as part of our modern digital society. And Australia has industrial land. We have energy, water resources to a point. We also have a stable political environment. So all of these things are what these data center developers are looking for. And if you're a big tech company, you're essentially looking around the globe at the moment for places that have land and energy. And the narrative around the data center industry has really shifted away from being about AI to being about energy. So now the cap to where this industry could go and how it can develop is really about where they can get the power. So currently our urban areas, so Western Sydney, Northern Sydney, Northwestern Melbourne, they have these big clusters of data centers. And the energy and water systems are really being caped and like strained by this. So if you look at what's going on, for instance, with AI companies like Phermus, they're starting to look for other places where they might be able to build data centers beyond the urban areas. The reason why data center developers want to be in the urban areas is because it's close to internet users. They talk about latency concerns, so that's where they don't have the speed if the users aren't right next to the data center. But when they talk about that, that's really only relevant to trading and banking. We don't know how much of the data inside these data centers is actually allocated to trading and banking. It's definitely not all of it. So but that's the main reason why they're located in these urban areas. So if you start thinking about AI training, so training of AI models where you have these AI factories, they can go into regional areas that are close to potentially the renewable energy zones or other areas that are serviced with a lot of energy. So next to gas or coal sites, you could start seeing how these different land uses the starting to be mapped out next to where the energy is. Petra, I want to go back to, we briefly touched on the role that water plays here. What does water usage for data centers look like in an Australian context? I'm thinking about it. We're a country that goes through massive floods, massive droughts. What is the scale of water that would be necessary for what's in the pipeline? And do we have that water? What impact would it have to use it for this? There are a lot of unknowns around how much water these centers use and it also depends a lot on who you ask. The data centers Australia describes the industry as modest water users and they highlight opportunities like reducing reliance on drinking water with what they call closed loop cooling systems. Lots of technical terms for how they describe different cooling systems and also the use of recycled water. But then if you look at what water authorities are forecasting or expecting, they seem to be expecting quite significant demand for drinking water. So in Sydney, for example, the current forecast suggests that water use might be as much as 250 megalitres a day by 2035 and to give you kind of a sense of what that is. That's kind of roughly how much drinking water Canberra uses the whole city of Canberra. And here in Melbourne where I am, Melbourne water says development applications, it has been used for new hyperscale data centers. They already exceed the water demand for nearly all of the states, top 30 business water users combined. So it seems like water authorities are expecting quite a huge draw on what is a limited resource. And of course in Australia, we know that in some places, particularly in southern states at the moment, water resources are already stretched. So in Victoria, for example, there are some rivers where there's not enough water to provide, to meet all the different uses. And so things like environmental flows aren't always being met as well as they could. So we already have this kind of stretch system with not enough water and we're adding this big new potential user. You are listening to download the show on ABC Radio National, Ray Johnston here with you. And I'm joined by Petra Stock, who is a climate reporter at the Guardian and also Dr. Bronwyn Combo, who is a researcher and lecturer at the UTS Transdisciplinary School. So we know that the demand is enormous and it's growing. So the next question is where Australia is actually going to get power from? Is our grid in any state handle of what is going to be necessary to run these data centres? So where do we stand at the moment? Where does Australia's electricity actually come from right now? And is that mixed changing? Obviously, Australia has been on this transition, moving away from coal and our coal power stations are getting very old, obviously producing a lot of greenhouse gas emissions. So over decades we've been transitioning towards greater use of renewables like wind, solar and hydro. And just towards the end of last year there was a pretty incredible breakthrough moment where for the first time renewables provided the highest share of electricity in the grid. So that was sort of a big milestone in that transition. But one of the things we know is that we need to keep building new renewables because those coal plants will close. And also part of the reason we're doing that is to meet Australia's emissions targets. And Australia has been on this big journey to build lots of renewable energy and sometimes at record breaking pace, I think towards the end of last year we had record amounts of new wind and solar added to the grid. But we're still overall not doing that quite fast enough to meet those renewable energy and emissions targets. So I guess thinking about how data centres might play into that, that's going to be an added challenge for our energy transition. Is our renewable energy system capable of being reliable enough for what these data centres need? Well I think the renewable energy system is a lot more complicated than just putting out a whole lot of solar panels and trying to connect to the grid. So for instance, some of the biggest delays have been because of community engagement. So we've seen community pushback within renewable energy zones and that's delayed a lot of the projects that have been put forward. And I think that's something that's also been underestimated with the data center industry, is the role of communities and how they can be engaged in these data center hubs, because they're the ones who are living alongside these data centers and will be directly affected by them. What opportunities are there for communities out there? How can we partner with communities? Those kind of questions need a bit more digging at the moment, otherwise the data center industry could repeat what happened with the energy transition. Okay, so let's look at the communities near these data centers then. What are they experiencing? What is it like to live near a data center? I've been doing some research with people around Sydney. I currently run a subject at the UTS Transdisciplinary School called Pathways to Societal Transitions and the students go out into communities and do research about the data centers there and ask the local community about what's going on there. Data centers as physical and sensory buildings are fairly unattractive. You might actually have walked past one and not realised that you've walked past one because it is quite a ambiguous looking factory if you're in the city. But if you go out into the Western suburbs, these are massive kind of facilities. There's a lot of various, there's lots of different types of buildings. So you've got the actual physical facility, you've got substations, you've got coolers. There's a lot of different parts to it. And they're highly securitised. So you can't actually see in often. They're very private and often you can't photograph or film these data centers. It's illegal. They are very loud, so they produce constant drone sound. And that's usually from the air conditioners that are cooling. So they'll have hundreds of air conditioning units, high-powered air conditioning units running at a single time, particularly if you've got a evaporative cooling units. But then when you actually ask communities, it depends where they are. So in Lankov, a couple of the data centers are located right in the bushland. And so that obviously has a sonic impact on the local urban bushland area. And so that's really transformed the sonic experience. There's the visual look of it as well within the bush. But beyond living right next to it, the thing that was interesting was that most people and communities don't know what data centers are. And they don't understand the implications. And because of the way the planning processes are, so these are state significant developments. And they're operated and kind of processed and approved at the state level. Communities, including local councils, are another stakeholder in that process that really gets to influence it at the end. So often communities don't really know what's going on. They get a data center there. And this is definitely the case in Western Sydney, where there's just a high number going up. The level of awareness of communities for the long-term future is very low. OK, so how can we involve communities in these decisions? How do we get the people that are going to be living next to them, able to have a say in what gets built near them? I think the industry itself needs to think beyond the current planning processes to look at how we can make it a more community-inclusive industry. So there are ways data centers can be designed to be more energy and water efficient. There are ways they can be more transparently. There are ways they can more transparently reflect the priorities of local communities. So for instance, how can this industry be designed to support the energy transition, affordable housing, to minimise impact on local bushland? To answer these questions, we need more scrutiny and policy around how data centers are being built, the energy and water they're accessing, how local communities living alongside them are benefiting. So the community benefit is very opaque. There are community benefit agreements, but they're often very short term and mismanaged. And these are long-term projects. These are physical buildings. They're going to be there for 20, 30 years. So the community needs to think long-term in terms of how they want to relate to data centers and simultaneously the data center developers can think about what it means to be a good neighbour over decades. And thinking more broadly about the Australian community as a whole, what happens to our power bills when we have to power all of these data centers? Are we going to be expecting to be paying more for power? Will different ways that the power is being generated reduce our bills? Do we have any idea about how it will impact all of us to have in excess of 250 data centers being built across Australia? There's high chance that power prices will go up. The Clean Energy Finance Corporation engaged some consultants to look at this. And they found that by 2035 that growth in data centers could actually increase wholesale electricity prices in New South Wales and Victoria by 23 to 26%. Obviously wholesale power prices is the cost of generating the electricity which is part of the bill, not the whole bill. But that does contribute to what people are paying for their home electricity. Should we be making the owners of these data centers, the people who are building them responsible for generating their own power for them? Is that even something that's possible to mandate? If you're going to build this data center in Western New South Wales in the bush, you have to come up with your own solar farm nearby to power it. Can we put conditions like that on these companies? I think the energy companies in New South Wales, on a consumer New South Wales, they are trying to do that and they're trying to work out regulations to make that happen. At the same time, the data center developers are willing to pay because they want this infrastructure built quickly. It's going to take longer than it will take to build a data center. So they're willing to pay just to speed it up. It does raise questions around private partnership agreements. So for instance, if we look at water and I know that Sydney Waters looking to have the data center developers subsidise or pay for recycled water plants to support the cooling of their facilities, but recycled water, if they did become reliant on that type of water source for cooling, that relies on water being available. So during a drought, you'll have recycled water infrastructure that's been paid for by the data center developers. There certainly isn't any water available because there's not enough rainfall. So they will need to rely on portable water in that instance. So this is where these kind of public private agreements need to be carefully designed to make sure that there is equitable water allocations in those types of scenarios. Thank you both so much for your time today. I really appreciate digging into this with me. Petra, where can people find you in your work? So I'm on the Guardian Online and also on Blue Sky. And Bronwyn, where can people find you in your work? The UTS profile and LinkedIn. And I'm occasionally on Blue Sky, but I'm a little bit inactive there. That's okay. Being inactive on social media is perfectly raised to pull at this point in time. Thank you both once again. I really appreciate it. Thank you for having me. Oh, thanks. And that's all the time we have for Download this show this week. Please make sure you subscribe so you don't miss any of our future episodes. And we of course love hearing all of your feedback. You can send it to download the show at abc.net.au or leave a review wherever you get your podcasts. You can always slide into my DMs as well. I'm on Instagram @rayjohnston. I'm Ray Johnston and you've been listening to Download this show. You've been listening to an abc podcast. Discover more great abc podcasts, live radio and exclusives on the abc listen app.