Sydney councils fear new datacentres could cause blackouts, block housing and affect locals’ health | Sydney

Datacentre developments are crowding out opportunities for housing and job-rich industries across Sydney, a New South Wales inquiry has heard, with one local council reporting a rise in blackouts linked to the industry’s expansion.

Several Sydney councils, all facing an influx of datacentre developments, have raised concerns about the health, environmental and amenity impacts on their local communities in submissions to the state’s datacentre inquiry.

Lane Cove Council, on Sydney’s northern shore, expressed “concern about brownouts and blackouts increasing in Lane Cove West since the expansion of datacentres”.

The council said the noise generated by datacentres could also be “offensive and disruptive” for local residents and wildlife, and raised health concerns related to the industry’s use of back-up diesel generators.

The City of Ryde, also in northern Sydney, said a cluster of twelve datacentres in Macquarie Park was “directly competing with opportunities for residential development in locations that offer strong public transport access”.

It said one proposed facility, on Lane Cove Road, was within walking distance of the Macquarie Park metro station, a site that could have accommodated new homes in a “well‑serviced, strategically located precinct”.

Added pressure on local water supplies from datacentres was also delaying some already approved housing projects, council’s submission revealed, “because Sydney Water has been unable to meet the required water supply capacity”.

Penrith city council urged the state government to pause further approvals until “utility servicing (water and power) impacts for NSW in both the short and long term are fully understood”.

The Western Sydney Regional Organisation of Councils said the cumulative impact of noise, heat and emissions from datacentre clusters was rarely considered in approvals for individual projects. “At scale, these effects are significant, especially in heat-vulnerable communities in western Sydney.

“Without coordinated planning, [datacentre] growth risks compounding existing pressures on electricity networks, water systems and local environments in western Sydney, and constraining services needed to enable much-needed housing and infrastructure delivery in the region.”

Jess Miller, the deputy lord mayor for the City of Sydney, said if every datacentre proposed in the NSW planning portal was built, they would require about 4.4 gigawatts of power – equivalent to the electricity needs of 10m households – and consume up to 25% of the city’s drinking water by 2035.

The additional water use required was estimated at 250m litres per day by 2035, equivalent to the total production capacity of the Sydney Desalination Plant. A submission from the desalination plant said it could double capacity to help alleviate water supply risks.

Data Centres Australia said the industry’s electricity and water requirements related to cooling. “Compute, as with all electrical devices (and the digital services we all use) creates heat.”

The peak body said developers were already investing in power purchase agreements for renewable energy, and the industry was keen to shift its reliance off drinking water, but cited cost and supply barriers.

“Not all water is the same. Non-potable recycled water represents an opportunity for datacentres but we need Sydney Water to make recycled water available at an affordable price,” the industry body said in a statement.

“There are things we need to do to ensure we have the energy availability in the grid to support the increased capacity, but we should not be panicking – we have a window of opportunity to address the system weaknesses like building more transmission and more firming like battery storage.”

The industry has faced growing pressure to address concerns about its energy and water use, with the federal government releasing a set of “national datacentre expectations” in March. The effects on housing, land use and local communities were set to be a focus of the NSW inquiry, with public hearings scheduled in May.

The Committee for Sydney said the state lacked an “overarching spatial strategy for datacentre deployment”, and there was an increasing call from communities and local councils to ensure datacentres were good corporate citizens.

“The prevailing narrative from many of these stakeholders is that datacentres are extractive; they take more than they give when it comes to energy, water, land.”