Silent bill shock: Data centres may raise power bills in Australia

Australian utilities are warning that the rapid expansion of data centre projects in New South Wales could significantly increase household electricity and water bills, as demand from the sector strains existing infrastructure and resource planning.

In submissions to a New South Wales parliamentary inquiry, energy and water providers said current regulations are not strong enough to ensure that the cost of new large-scale digital infrastructure does not fall on ordinary consumers, News.Az reports, citing Reuters.

The warning comes as the state, which includes Sydney and accounts for around one-third of Australia’s population, experiences a surge in approvals for data centre developments from global tech giants such as Amazon and Microsoft. Around 10 projects have already been approved without strict limits on electricity or water consumption.

Grid operator Transgrid said it has received connection requests totalling more than 10 gigawatts in the past 18 months—equivalent to over half of the state’s peak electricity demand. Some proposed facilities alone are seeking more than 1,200 megawatts.

“Without appropriate policy settings, this growth could place pressure on electricity infrastructure planning, system reliability and ultimately consumer costs,” Transgrid executive Jason Krstanoski said, adding that existing customers “should not subsidise new large loads.”

Water authorities are also raising concerns. The Water Directorate, which represents 92 local water utilities across New South Wales, warned that few areas in the state can support the scale and speed of data centre expansion without risking water security.

Data centres often require large volumes of water for cooling systems, particularly evaporative cooling, placing additional pressure on already limited supplies. The Water Services Association of Australia said the sector’s demand is significantly higher than most other users.

Its executive director Adam Lovell warned that if potable water meant for public use is redirected to industrial facilities, utilities may need to invest in new, more expensive water sources—costs that would ultimately be passed on to households.

New South Wales Planning Minister Paul Scully said the government recognizes data centres as essential infrastructure for the modern economy and is working to ensure their development includes adequate power and water planning requirements.

Opposition lawmakers, however, argue that approvals are moving faster than safeguards. Greens MP Abigail Boyd, who chairs the inquiry, said the public deserves transparency over the long-term costs of expanding the sector.

As Australia competes for a share of the global data centre boom, the debate is intensifying over how to balance digital infrastructure growth with rising pressure on essential services—and who should ultimately pay the price.

News.Az 

By Aysel Mammadzada