Data centres predicted to pull in $26bn worth of investment by 2030

New investment among Australia’s biggest data centre operators is set to top $26bn by the end of the decade as demand for artificial intelligence tools soars and more people install smart devices in their homes.

The nation’s top five data centres providers – AirTrunk, Amazon, CDC, Microsoft and NextDC – have also hit back at claims they are exacerbating climate change because of the amount of energy and water they use to power and cool their servers.

The companies say data centres are a “crucial component of Australia’s digital infrastructure” – supporting connectivity, from internet use to
emergency response and disease surveillance.

They cite a report from Mandala Partners which found data centres account for 1 per cent of Australia’s annual electricity use or about three
terawatt hours.

AirTrunk founder Robin Khuda – who has become one of Australia’s richest people following the sale of the company to Blackstone for $24bn – said data centres could accelerate the country’s transition to renewable energy, given the investment providers are making in wind, solar and alternative sources.

And he believes this can be done without nuclear energy – an option that Oracle is advocating, after announcing it is designing a data centre
overseas with three small nuclear reactors to produce more than a gigawatt of power.

Khuda said solar and wind farms, could be commissioned more quickly than nuclear reactors. “With its abundant renewable energy and
commitment to accelerating the energy transition, Australia can be at the forefront of the development of sustainable data centres to enable the digital economy,” Khuda said.

The data centre operators and their big tech customers have also committed to matching their power use with 100 per cent renewable energy by 2030 via power purchase agreements (PPAs) to spur investment in renewables. Already 45 per cent of global renewable energy PPAs involve data centre operators.

Australia’s data centre capacity is forecast to more than double from 1350 to 3100 megawatts by 2030, requiring an extra $26bn in infrastructure investment, according to Mandala, with partner Tom McMahon saying Australia could become a “leading global player”.

The report – which data centre operators commissioned – also found that without the aggregation of computing and storage in “energy-efficient, hyperscale data centres”, Australian businesses would consume 67 per cent more energy each year – about 2 terawatt hours.

Amazon subsidiary AWS is the biggest data centre operator in Australia and is investing an extra $13.6bn in its eastern seaboard infrastructure in the next three years.

Carly Wishart, AWS director of data centre planning and delivery for the Asia-Pacic, said there was “tremendous potential for sustainable, digital, and AI-led economic growth for the country”.

“This requires continuous investment in digital infrastructure and workforce skills, a focus on more renewable energy projects.”

Microsoft ANZ chief technology officer Sarah Carney said it was vital data centre operators were “exemplars of sustainable development that further Australia’s leadership in the renewable energy space”.

NextDC chief executive Craig Scroggie said it was “impossible to imagine how we would continue to innovate and drive the nation’s economy”
without data centres.

“As AI marks the next big technology shift, there will be an ever increasing demand for data centres and in turn a greater focus on energy
efficiency.”

Elsewhere, Macquarie Technology has refinanced its debt facility to $450m to expand its data centre business. Co-founder and chief executive David Tudehope said it was a “milestone”.

This article first appeared in The Australian.