Australian water sector sets out priorities for data centre water management

(by Karma Loveday)

Governments should consider setting minimum water usage effectiveness (WUE) and power usage effectiveness (PUE) standards for new data centre facilities.

That was one of five priorities set out in a major new report from the Water Services Association of Australia (WSAA) defining the importance of water to the success of the data centre sector in Australia. WSAA said its research is intended to inform water and data sector planners, policy-makers and stakeholders about dimensions of data centre operations and potential water needs. This is ultimately to enable rapid growth in data centre investment (a AUS$40bn ‘investable universe’ is forecast by 2028) to underpin the AI revolution and boost national productivity.

WSAA set out five priorities to develop collaborative, transparent and beneficial partnerships between the data, water, energy sectors and communities, as follows: 

• Early engagement between data centre customers and water utilities – Data centre customers should consult water utilities at the feasibility stage — before land acquisition, power agreements, or anchor tenants are locked in — to understand water availability, servicing requirements, infrastructure timelines and costs at different locations. Policy settings should enable integrated planning and assessments that consider local and cumulative impacts for land, water, energy and carbon, system capacity, climate resilience, and long-term community needs. 

• Building trust through transparent reporting of water and energy use metrics – Public reporting of WUE, PUE and associated load/utilisation metrics is growing. Making this standard practice will improve accountability, strengthen community trust and drive continuous improvement across the sector. WSAA added that many global regions are starting to require this as a way of attracting sustainable investment. 

• Minimum efficiency standards to embed best practices across the market – Australian governments should consider setting minimum WUE and PUE standards for new facilities, with appropriate guidance for different climate zones. WSAA said these standards should be technology-neutral, fit for context and reflect modern designs and data. Australian data centres can already achieve WUE as low as 0.01; many globally commit to voluntary frameworks of 0.4 in water stressed regions; and global reports predict levels under 1.0. Sustainable standard levels would encourage investment in high-performing, efficient, lower-carbon cooling solutions. 

• Recycled water and circular economy solutions are preferred pathways – The water sector will prioritise recycled water where feasible for data centre customers and where this supports best value outcomes for communities. Planning frameworks and investment pathways should enable connection to wastewater mains with adequate flows and space for treatment assets. Utilities will encourage and support data centre customers to pursue circular economy initiatives such as heat recovery, onsite water recycling, and water-positive design. 

• Fair, consistent and future-ready regulatory and cost-recovery frameworks – Any infrastructure required to service data centres, such as network connections, water supply assets and wastewater management, should not be funded by other customers. Clear and fit-for-purpose regulatory arrangements that keep pace with evolving technologies are needed, as are price signals that encourage efficient use of water. 

WSAA said that together, “these priorities outline a practical set of policy levers for governments, regulators and utilities to steer data centre growth towards efficient, community-beneficial outcomes”. Australia could, it added, be established as a global showcase of sustainable and efficient data centre development. The work has relevance for all nations where data centre growth is rapid.