At a glance
S7 is NEXTDC's 612MW campus at Eastern Creek in Western Sydney, developed with OpenAI under a December 2025 memorandum of understanding as part of the OpenAI for Countries program, with the first phase due in the second half of 2027.
NEXTDC has switched the campus's cooling from recycled water to a waterless method after it could not secure planning permission for the pipeline needed to carry treated sewage to the site, a decision reported first by Reuters on 23 July 2026.
The waterless method circulates liquid coolant around the chips and rejects the heat with fans, which data centre analysts say uses no water but more energy than the evaporative cooling recycled water would have supplied.
Since late 2025 NSW has required data centre applicants to disclose water use and meet a fixed power usage effectiveness (PUE) cap of 1.3, at the efficient end of global averages; S7 is one of six projects facing the rule, and NEXTDC has not disclosed a target PUE for it.
NEXTDC says it still favours recycled water where the infrastructure exists, and Sydney Water and coNEXA remain possible suppliers if a pipeline is approved, while Transgrid says Sydney's network is near its connection limit.
NEXTDC drops recycled water at the 612MW S7 campus
NEXTDC's S7 campus at Eastern Creek in Western Sydney is designed for 612MW at full buildout and is being developed with OpenAI, which signed a memorandum of understanding with the operator in December 2025 under its OpenAI for Countries program. The roughly A$7 billion project, about US$4.6 billion, has its first phase due in the second half of 2027, and would give OpenAI capacity to use with an option to scale, ranking S7 among the largest AI data centres in the world. The 612MW figure, set out in the planning documents, is up from the 550MW NEXTDC estimated when it acquired the Eastern Creek site in October 2024.
Planning documents lodged in April showed NEXTDC intended to cool the campus with recycled water, drawing treated sewage from Sydney's network so it could avoid drinking water and ease its draw on the electricity grid. NEXTDC has since moved to a waterless method instead, a decision reported first by Reuters. The operator said it left talks with utilities because there was no planning permission to build the pipeline that would carry recycled water to the site. "Recycled water has real merit and it can support lower PUE and better overall sustainability, and NEXTDC considers it wherever that infrastructure exists," chief executive Craig Scroggie said. "In Western Sydney, the enabling infrastructure is not yet in place." Sydney Water and the recycled water company coNEXA were both named in planning documents as possible suppliers; Sydney Water did not respond to Reuters, and coNEXA declined to comment.
The change applies to how S7 sheds heat rather than to its core design, which keeps closed-loop liquid cooling to the chips. NEXTDC described S7 as a high-density, liquid-cooled campus when it announced the OpenAI partnership, and the recycled water was the route it had chosen to reject that heat.
Waterless cooling uses no water and more power
The waterless method takes water out of the cooling system and uses more electricity in its place. NEXTDC said it will circulate liquid coolant around the chips to extract heat, which is then fanned away, an approach that uses no water but, on the reading of the analysts Reuters spoke to, draws more power than the evaporative cooling recycled water would have supplied. Evaporative cooling uses water to shed heat and keep energy use down; dry, fan-based heat rejection holds the water back and spends more power to do the same job.
"If we take the current situation at face value it will be more energy intensive, so NEXTDC will have to address these concerns," said Sarvaesh Mohan, an analyst at data centre consultancy DCByte. NEXTDC declined to comment on whether the new method would use more energy, and OpenAI referred questions about the cooling design to NEXTDC. The choice sets water against power: a facility can spare the town's water or spare the grid's electricity, and at S7 the available infrastructure has settled that trade in favour of saving water. NEXTDC's existing Australian sites use evaporative cooling, reported at a water usage effectiveness of 2.25 litres per kilowatt-hour in our comparison of operators on PUE, water and carbon, so S7 moves the operator toward lower water use and higher energy use than its current fleet.
NSW caps data centre PUE at 1.3 and requires water figures
Since late 2025, NSW has required data centre developers to disclose water use and meet a fixed PUE limit, on a Reuters review of 35 applications in the state, and S7 is one of six projects to face the rule. The cap is set at 1.3, at the efficient end of global averages, which a dry, fan-based design has to work to reach. NEXTDC has not published a target PUE for S7.
Federal policy is moving the same way. This month the Australian government said it would set energy and water use limits on data centre developments as part of a wider set of AI guardrails, building on the water and efficiency points already in the National AI Plan expectations of developers and the five principles NSW set out in its consultation paper. Independent senator David Pocock said the federal laws should include mandatory requirements for local sovereign compute access, water use, renewable energy and planning controls. The rules ask new campuses to hold water use and energy use down at once, and the recycled-water route that would have done both at S7 depends on a pipeline that is not yet approved.
Transgrid says Sydney's network is near its connection limit
Sydney's transmission network has little room for new large loads. Transgrid, the grid operator for the city, said it has "limited capacity to connect new large data centres to the transmission network in Sydney without augmenting the bulk network," and that data centres would need to fund that expansion. In May its executive general manager Jason Krstanoski told an ongoing NSW parliamentary inquiry that "existing regulatory arrangements were not designed for this level of large, clustered load growth." A cooling method that raises a 612MW campus's power draw adds to that demand, the subject of our reporting on Transgrid's call for data centres to fund the grid capacity they unlock across Western Sydney.
DCByte's Mohan described the recycled-water setback as a symptom of a wider timing mismatch, "the wider gap between the current AI infrastructure boom and the slower deployment cycles of local utilities." coNEXA chief executive Kurt Dahl made a similar point from the supply side, saying connecting data centres to recycled water should be treated "with urgency, as data centres are currently making long-term choices between energy and water for their preferred approach for cooling." Developers fix their cooling design years before utilities can build new pipelines or transmission, so the option that needs new infrastructure is often unavailable at the point the design is set.
Other operators cool with closed-loop and recycled water
Several Australian operators hold water use down without moving to a more energy-intensive design. CDC Data Centres uses a closed-loop chilled water system that is filled once and recirculated for the life of the building, which it reports as near-zero operational water, a water usage effectiveness of 0.01 litres per kilowatt-hour, alongside a PUE of 1.38. Its newest campuses market "zero water consumption for primary cooling" while still supporting liquid cooling for dense AI workloads, and CDC is the reported front-runner for Anthropic's 300 to 500MW Australian training contract.
Others draw on recycled supply. AWS runs free-air cooling for about 96% of the year at its Melbourne sites and has signed to draw recycled water for the hot-day remainder, the pipeline route S7 could not secure. AirTrunk draws 53% of its portfolio water from recycled sources, and Firmus designs for a dry-mode default, covered in our comparison of Firmus's energy and water policy. The cooling and water commitments for each site sit in our directory of Australian data centres.
Operator or project | Water for cooling | Energy or PUE |
|---|---|---|
NEXTDC S7 (with OpenAI) | None; waterless, fan-cooled | More energy on analysts’ reading; no PUE target disclosed |
CDC (Anthropic front-runner) | Near zero, WUE 0.01; closed-loop (CDC figure) | 1.38 PUE (CDC-stated) |
AWS western Melbourne | Recycled on hot days, free-air most of the year | Low energy from free-air; WUE 0.12 (global) |
AirTrunk | 53% from recycled sources (FY24) | 1.23 to 1.28 target PUE |
Source: Operator sustainability disclosures and Reuters, FY24 to July 2026. Figures are operator-reported on different bases and indicate approach more than a strict ranking.
No single design holds both water and energy at the minimum, which is what makes the state's request for low water and a low PUE at once difficult to meet. CDC pairs near-zero water with a moderate PUE, AWS pairs free-air efficiency with a recycled top-up, and S7 takes the waterless path at 612MW, above the 50MW NEXTDC reports running the system at to date.