Data centres and energy: getting the growth balance right

Data centres are among the fastest-growing users of electricity in the developed world. Handled well, that demand can drive investment and clean energy growth. Handled poorly, it strains grids, raises emissions and erodes public trust. The difference is planning.

The rise of AI has turned data centres from a niche concern into a headline energy issue. Training and running large models requires enormous, sustained computing power, and that power has to come from somewhere. As a result, communities and governments are increasingly asking a fair question: is this growth good for us, or is it simply being done to us? The honest answer is that it can be either — and which one depends almost entirely on how it is planned.

The real tension

The opportunity is genuine. Data centre investment brings construction activity, long-term operational roles, and demand that can underwrite new clean energy generation. But the pressures are just as real. Large facilities can place significant new load on electricity grids, compete for water where they use it for cooling, and concentrate benefits with operators while concentrating concerns — power prices, noise, land use — with the surrounding community. Ignoring either side of that ledger is how good projects become local controversies.

What “getting the balance right” looks like

Several principles separate well-planned growth from the alternative. Site for energy, not just land: build where clean, firm power is genuinely abundant, so new demand pulls clean generation forward rather than straining existing supply. Plan with the grid, not around it: coordinate facilities with energy planners early, so transmission and generation keep pace. Set efficiency expectations: hold new facilities to strong standards for energy and water use rather than accepting whatever is cheapest to build. And share the benefit visibly: make sure the communities hosting this infrastructure see real, lasting value — in jobs, skills, and contributions to local energy and amenity.

Tasmania as a worked example

Tasmania shows how the balance can tip towards opportunity. Its renewable energy base means new computing load can, in principle, be met with clean power rather than fossil generation — the single biggest factor in whether data centre growth is sustainable. That is a real and unusual advantage. But it is not automatic. Capturing it means coordinating data centre demand with energy planning, being transparent about water and grid impacts, and ensuring local communities share in the gains. The renewable advantage creates the possibility of beneficial growth; planning is what turns it into the outcome.

A solvable problem

The energy footprint of digital infrastructure is often framed as an unavoidable cost of progress. It is better understood as a planning challenge — one we already have the tools to manage. Where facilities are built, how they are powered, how efficiently they run, and how their benefits are shared are all choices. Made deliberately, and made together, they turn a source of anxiety into a source of advantage.

That word — together — is the crux. Data centres, energy, connectivity and community outcomes cannot be optimised one project at a time. Getting the balance right at the level of a single facility is necessary; getting it right across the whole system is what actually delivers sustainable growth — and that requires coordination by design.

Part of the Digital Infrastructure Institute’s series on planning Australia’s digital infrastructure.