Calls for guidelines after Greater Western Water documents reveal potential data centre water usage

Australia Broadcast Center

14-07-2025

Data centres in Melbourne's north and west could consume enough drinking water to supply 330,000 residents each year, raising concerns they could lead to water shortages and limit new housing.
Documents, released under Freedom of Information laws, reveal water company Greater Western Water is currently reviewing 19 applications from data centres for water usage, with the requests totalling 19,714 megalitres (ML) of drinking water each year.
One proposal alone in the Mt Cottrell area could consume up to 3,926 ML of water per year — equivalent to the annual water usage of 66,000 Melburnians — with an estimated water usage of 321 litres per second during peak demand.
The revelations have prompted calls for the Victorian government to introduce mandatory water efficiency standards for data centres, as well as make urgent upgrades to Melbourne's water infrastructure.
Of the 19 data centre applications, five have been approved by Greater Western Water so far, including one centre near Tarneit which was granted permission to consume up to 734.4 megalitres per year.
In comparison, the collective water consumption of 13 out of 15 existing data centres within Greater Western Water's service area was just 33.1 megalitres last year, according to the documents (two centres did not have a figure listed).
The proposed water use of the 19 data centre applications is nearly 600 times that amount.
Tim Fletcher, professor of urban ecohydrology at the University of Melbourne, said 19.7 gigalitres accounted for about 4 per cent of Melbourne's total water use, and would be a "substantial" increase if approved.
Without critical upgrades to its water infrastructure, he said Melbourne's water security was increasingly at risk.
"We're now at a point where the combination of climate change, a growing population, and growing industrial use — including these data centres — mean we're going to need substantial extra resources."
Data centres play a vital role in the digital age, housing servers that are used for the processing and storage of data, and that also help train generative artificial intelligence models like ChatGPT.
They require vast amounts of water to cool their servers, and also use significant amounts of energy, accounting for about 5 per cent of Australia's total electricity consumption — a figure that is expected to grow to 8 per cent by 2030.
Ascelin Gordon, a senior lecturer in sustainability and planning at RMIT University, said strict sustainability standards needed to be placed on data centres, especially amid the boom in cloud computing and AI, with ChatGPT receiving about a billion requests from users every day.
"Each of those queries involves electricity to run the data centres that the ChatGPT models run on, and the water associated with keeping them cool," Dr Gordon said.
"And so, while any individual query is going to be quite small, the net effect of tens of millions of queries every day is significant."
Melbourne's retail water corporations are Greater Western Water, Yarra Valley Water and South East Water, and they are responsible for assessing whether the network and broader system can meet demand, before approvals are granted.
But there are no specific policies from the Victorian government addressing data centre water consumption.
Dr Gordon said data centres should be required to use recycled or non-drinking water, and their large footprints made them an "ideal candidate" to capture, store and use rainwater.
"Often they'll be quite large structures, so there would be the capacity to catch fairly significant amounts of rainwater from that, before drawing on potable mains [drinking] water," Dr Gordon said.
In a statement to the ABC, Greater Western Water said it was exploring options that would allow them to sustainably support data centre development.
"Large water users, such as data centres, are assessed against Melbourne's water supplies, growing population, changing economic needs and drying climate," Greater Western Water's general manager of strategy and partnerships Kessia Thomson said.
"We're working with other water corporations and the data centres to better understand the amount of water they expect to use on an annual basis and support them to minimise their water usage while looking at supply alternatives such as recycled water."
In its 2025 Annual Water Outlook, Melbourne Water stated that, on average, inflows into Melbourne's water storages were "not enough to supply our city's growing population".
Victoria's desalination plant, which supplies up to 150 gigalitres of water a year, provides a crucial buffer against dry conditions.
But Tim Fletcher said it was not a sustainable option due to its large energy consumption — particularly when compared to stormwater harvesting, which could collect about 280 gigalitres of excess run-off every year.
He warned that failing to take action now to shore up Melbourne's long-term water resilience could lead to the government making "rushed decisions" in the future. He also said data centres could cause stress on local water infrastructure.
Proposed water usage for each data centre was obtained from the FOI documents.
In the 2023-24 financial year, the average daily water use of Melburnians was 163 litres per person, per day, according to Melbourne Water.
This figure was used to calculate the equivalent usage of Melburnians.
"These data centres are not just using very large volumes of water, but high rates of flow," Professor Fletcher said.
"A pipe has a capacity to deliver a certain flow rate, and if you want to go above that, you either need to increase the pressure — which means you'll start having damage in the network — or you need to increase the pipe sizes."
Melbourne's west is one of the fastest growing regions in Australia. It's also one of the most targeted by data centres due to its abundance of affordable land.
In comparison to Greater Western Water's 19 applications, Yarra Valley Water, which provides water to 2 million residents in Melbourne's north and east, is reviewing just seven applications from data centres.
South East Water, which extends down Victoria's Mornington Peninsula, has received two preliminary requests in the last 12 months.
Last year, the Sydney Morning Herald reported that data centres threatened to delay the construction of thousands of new homes in Sydney's Macquarie Park due to the strain on the area's water supply.
The National Growth Areas Alliance, which represents local governments in outer suburban areas, said it was concerned Melbourne's west could follow a similar path.
"It's not just the water consumption, but also the infrastructure needed to deliver that water, and the priority that [data centres] may be given over residential development, where Australia's real need is at the moment," Bronwen Clark, National Growth Areas Alliance CEO, said.
There are currently more than 200 data centres across Australia.
Property consultancy firm Knight Frank's 2025 Global Data Centres Report stated Australia was second only to the US as a top data centre investment location.
The report also specifically identified Melbourne as a key hub due to its power and land availability, as well as a "more proactive" approach to approving data centre applications when compared to Sydney.
Victoria has already attracted data centre investment from Amazon and Microsoft, and in June, the state government, alongside tech company NextDC, announced the development of a new data centre in Fishermans Bend, having invested $180 million into the $2 billion digital hub.
A spokesperson for NextDC, which has multiple data centres in Melbourne, said the company had incorporated stormwater retention basins, vegetated swales, buffer strips and rain gardens in some of its sites, and the Fishermans Bend facility would comply with all water licensing requirements.
"Water plays a crucial role as the primary medium for heat transfer in and out of the data halls, requiring significant infrastructure and planning," a NextDC spokesperson said.
"We optimise water use through reuse, recycling and recovery, aiming to reduce our water dependency and environmental impact in the short and long-term."
A Victorian government spokesperson said it was supporting data centre investment to create jobs and support the economy, while balancing water and energy resources.
"All data centres have different water and energy needs and companies are getting smarter about how they can save energy and water," the spokesperson said.
"This includes adopting new cooling technology and smarter software to use less energy and water overall."
Dr Gordon said he understood why governments wanted to incentivise the data centre industry in Australia's cities, in order to generate economic growth.
But he said they needed to think clearly about the potential long-term ramifications.
"It's this trade-off between jobs and economic growth, and the impact on the environment," Dr Gordon said.
"And the environment is the one that usually loses out."