AI is driving data centre growth – and it's bringing environmental challenges

Australia Broadcast Center

19-05-2025

There is no company sign out the front and that's deliberate.
The nondescript concrete cube, surrounded by high fences and security cameras, is a data centre housing infrastructure which keeps our digital world functioning.
The internet can feel like magic: information and services seemingly appear out of thin air and reach us wherever we are. But a vast physical infrastructure of undersea cables, wires and data centres is underpinning everything we do online.
At this site near Melbourne's CBD, and a growing number of others like it across the world, data (the information computers interpret) is being stored, processed and distributed by rows of computer servers locked in cages.
Security is high because the data belongs to technology companies, financial institutions and government departments — all customers of this Equinix facility according to managing director Guy Danskine. This is one of 18 data centres the global company operates in Australia.
"When you woke up this morning … you probably looked at internet banking, you probably checked the weather… you might have watched a show on the bus or the tram. All of that came through, or from, a data centre, probably multiple data centres," Danskine says.
Data centres whirr away, critical to so much of our daily lives, yet they don't often make the headlines. But that is starting to change. As the evolution of artificial intelligence (AI) unfolds, demand for data centres is expected to increase dramatically. This will bring logistical and environmental challenges because data centres are power hungry creatures.
In Australia, Morgan Stanley estimates that data centres are expected to use 8 per cent of the electricity on the country's power grid by 2030.
The ABC requested a tour of a "co-location" data centre — where organisations lease space to house their IT equipment in a data centre owned by someone else — to see inside this little-known but increasingly important universe.
"Dirt is the enemy of a data centre," the site's senior manager Bruce McNicoll says as he strides along a spotless, dimly lit corridor.
Outside the data hall sticky door mats are positioned to capture dirt or dust on people's shoes. When the door to the data hall opens, a burst of air shoots out to keep dust particles away. Dust, dirt, or metal filings could harm electronic equipment or clog the fans circulating air and make them run less efficiently, McNicoll says.
The data hall — where computer servers are arranged in long narrow rows and kept behind locked cages — is a windowless cavern which is carefully temperature controlled to stop the computers from overheating. The constant whirr of fans circulating cool air, and exhausts sucking the heat produced by the servers out of the hall, creates an endless drone.
Data centre buildings are kept cool using air cooling and evaporative cooling. Around the servers air cooling is generally used, but a technology called liquid cooling "where you have the chips sitting on a type of liquid" is also emerging, Danskine says.
Powering data centres and ensuring temperature control is energy intensive. McNicoll, an affable Englishman who seems genuinely passionate about the intricacies of the complex system he oversees, excitedly points out the PUE — which stands for power usage effectiveness and is an industry-wide metric used to calculate data centre energy efficiency — which is tracked in real time and displayed on small screens around the building.
"Security of energy is a big one for our industry at the moment. I was [recently] in the US. They describe it as an 'energy emergency' over there, in the sense of thinking about AI as a competitive differentiator, you need data centres to do that, and you need a lot of energy," Danskine says.
The company is aiming to use 100 per cent renewable energy by 2030, Danskine says. But as energy demand increases, continuing to find sustainable supply "is a big challenge for our industry", he says.
"There is not enough energy projects developed, announced, funded today that will [meet demand]. So, we need to accelerate that."
In the US, where most the world's data centres are located, tech companies are turning to nuclear. Last year, Google and Microsoft signed deals to use nuclear energy to power data centres. "Nuclear is a big part of that conversation [in the US], here it's a bit different in terms of social licence," Danskine says.
A recent report by the International Energy Agency (IEA) projects data centres will use double the electricity by 2030 — and that's driven by AI. The IEA says around 1.5 per cent of the world's electricity is currently used to power data centres. While it's "a small share of global electricity", the report says, "local impacts are far more pronounced" because data centres tend to be concentrated in certain areas.
Gordon Noble, research director with the Institute for Sustainable Futures at UTS , has investigated data centre sustainability. He says: "[The data centre industry] can't scale renewable energy fast enough to meet their demands."
Some data centres consume large amounts of water, which they use to cool the servers. Gordon says that in regions experiencing water stress, such as California, the water use of data centres is becoming a concern.
Closer to home, The Sydney Morning Herald last year reported on concerns that data centres in Sydney were straining the area's water supply.
Innovative technologies which could reduce water use are emerging, Noble says. But managing energy and water use will also become more challenging for data centres in a changing climate, especially where data centres deal with extreme heat days, he says.
The increasing demand for green energy to drive AI technology has implications for how quickly Australia can decarbonise, he says. "If all the renewable energy goes into AI, it's not going into decarbonising different parts of the economy."
Noble believes we have no concept of scarcity when it comes to data, and this needs to change. "We think we can just have as much data as we want. And I think that economic concept of scarcity needs to become part of the conversation," he says.
On the level below the data hall at the Equinix facility in Melbourne is a back-up power system to keep the servers running if the mains power supply fails. There are diesel generators and batteries to bridge the time it takes to get the generators operating.
Recently, when a fire in an electric substation cut power to Heathrow airport, closing one of the world's busiest airports for almost a day, the New York Times reported that a nearby data centre relied on its back up power to continue operating: "'The data centre industry is relatively young. They are more attuned to the cost of a catastrophic failure," said Simon Gallagher, the managing director at UK Networks Services, which advises clients on the resilience of their electricity networks told the New York Times.
Watching for risks and potential disruptions is a constant task of all the engineers and electricians who keep the critical infrastructure humming, McNicoll says. In a growing industry, finding the right people for the job can be difficult, he says.
The size of the data centre industry has already overshot projections of where it would be today, Danskine says.
"Nobody could have forecast a couple of things that have really grown pretty dramatically: personal data consumption — just what you can do on your phone now is extraordinarily capable; cloud computing has continued to grow; and now we have this next wave of generative AI in particular, and if this is a cricket match we're in the first couple of overs, this has got a long way to go," he says.