Data centres in Australia’s most populous city are set to gobble up about 250 megalitres a day in the next decade, surpassing beer breweries.
With the proliferation of artificial intelligence tools and cloud computing, the storage behemoths are reshaping how governments and businesses are rethinking infrastructure projects.
Sydney Water is already grappling with gushing demand for the valuable resource, which is crucial for cooling overheating storage systems.
“Call it the new gold or the new oil industry, it is rapidly becoming the largest new water demand in the city,” the utility’s business manager, Paul Higham, told an industry audience on June 10.
One data centre requires about 5 million litres per day—the equivalent of two Olympic-sized swimming pools or 9,000 homes, he noted.
That is a challenging demand to fulfil in drought-prone Australia, where half of the last decade has seen dry conditions, he said.
Higham said a data centre had cracked the top 20 of water users in Sydney in 2025 recording 0.81 megalitres per day, with expectations to push past five mega litres daily.
It is quickly set to leapfrog the current biggest user: a beer brewery at 2.09 mega litres a day.
“There’s no water utility in Australia that will turn around and say, ‘We’ve got that volume of spare capacity in our system.’ It just doesn’t exist,” Higham emphasised.
He said 12 confidentiality agreements had already been signed with tech companies, with more set to show interest.
Australia attracted the second-highest data centre investment globally in 2025.
However, independent Senator David Pocock has criticised how it could end up using resources at a cost to Australian taxpayers.
“It’s not hard to imagine a future where Australians are paying the cost of hosting this sort of infrastructure, and Australian businesses are paying international prices to access data processing here in Australia,” he told AAP on June 9 as he conducted a blistering tirade on the sector in the media.
Still, industry representatives say the economic boon from data centres and catching the next technological wave to maintain living standards was necessary.
“If we play our cards right ... (data centres) give us a massive leg up for productivity growth,” said Innes Willox, CEO of the Australian Industry Group.
“We haven’t had productivity that’s kept up with wage increases.”
The adoption of AI is expected to boost productivity growth as already reflected by $8.7 billion invested in the data centre build-out in the March quarter, according to Australian Bureau of Statistics data.
But the former political staffer and journalist warned it was not an open and shut case for communities on the ground dealing with the realities of a changing economy, saying the sector needed a “social licence.”
