Australian data centres drive AUD $7.2 billion public investment

New analysis highlights the economic and infrastructure impact of data centres in Australia, revealing significant ongoing and projected investment in national energy and water systems. The report finds that data centres not only support growing digital demand but also contribute to critical infrastructure and efficiency gains across the economy.

Data centres have invested AUD $3 billion in energy grid infrastructure between 2020 and 2025, with a further AUD $7.2 billion forecast over the next five years. Of this, more than AUD $1.1 billion is directed toward excess capacity available for public use, according to the new research by Mandala Partners, commissioned by Data Centres Australia.

The report identifies that data centres deliver AUD $12.6 billion of gross-value-added per terawatt hour of energy consumed, a figure the research states is higher than other major industrial sectors such as mining and agriculture.

Currently, data centres account for approximately 2% of Australia’s national energy consumption, which is comparable to the usage by retail shopping centres. Projections indicate this could rise to around 6% by 2030, reflecting the country's expanding digital sector and associated infrastructure requirements.

Data centres are offsetting 70% of their electricity consumption with renewable energy. This has been achieved through power purchase agreements, large-scale generation certificates, and adoption of on-site solar generation, which together account for 1.5 terawatt hours of renewable energy contribution.

“Data centres are an essential enabler for our modern economy, supporting everything from online conveniences to critical emergency services. This research shows that while data centres are consuming more energy, and this remains a significant challenge to manage, they also invest and are highly efficient and productive in their consumption, delivering a higher output per unit of energy than any industrial sector,” said Belinda Dennett, Chief Executive Officer, Data Centres Australia.

The research finds data centres are more than seven times as energy efficient as traditional on-premise computing infrastructure. This efficiency is attributed to centralising computing processes, utilising advanced chips, and deploying optimised cooling technologies that reduce overall electricity use.

Data centres also invest in water systems. Over the next five years, up to AUD $1.1 billion will be invested in recycled water pipelines and treatment plants, exceeding the requirements for internal use and contributing capacity for public benefit.

Mandala Partners’ Managing Partner, Amit Singh, said the narrative around the sector should expand beyond resource demand to recognise its broader contributions. “This idea that data centres will just passively consume energy and water is overblown, because the reality is they will be active investors in Australia's essential infrastructure. The key now is ensuring policy settings support sustainable growth through faster approvals and enabling private investment in critical infrastructure,” said Singh.

The report suggests policy frameworks will be important in managing the balance between sector growth, energy efficiency, and infrastructure development.

“Data Centres Australia aims to secure Australia's place as a major hub for AI infrastructure investment and sustainable data centre development. This is a highly dynamic ecosystem and we look forward engaging constructively with government and all stakeholders to establish the best possible policy settings supporting infrastructure,” said Dennett.