The Public Accountability and Works Committee's inquiry into data centres opened in January 2026 and received 123 written submissions ahead of hearings. Submitters include data centre operators, local councils, transmission and distribution networks, environmental organisations, unions, universities, and federal agencies. We reviewed the submissions to produce this analysis
The inquiry, chaired by Greens MLC Abigail Boyd, is examining how NSW manages the current data centre build-out. Global capital expenditure on data centres is projected to exceed US$1 trillion annually by 2029, according to the Business Council of Australia's submission. Australia is now the world's second-largest investment destination for the sector, with USD $6.7 billion flowing in during 2024 alone. NSW sits at the centre of that activity: greater Sydney accounts for more than a third of Australia's data centre facilities and over 60 per cent of national capacity.
The submissions do not debate whether data centres should exist in NSW. On that point there is near-universal agreement. The fault lines run through who pays for grid upgrades, whether potable water should be used for server cooling, whether planning frameworks can keep pace with the investment pipeline, and whether communities hosting these facilities will see a proportionate share of the benefits.
Who Submitted
The industry and operator cohort, including Data Centres Australia, the Business Council of Australia, the Australian Information Industry Association, and WinDC, argue that restrictive or uncertain regulation risks diverting globally mobile capital to competing jurisdictions.
Local government submitters, including the City of Sydney, Penrith City Council, Lane Cove, and Bayside, are focused on cumulative infrastructure strain, employment land displacement, and community cost-shifting.
The energy and grid sector, Transgrid, the NSW distribution networks (Ausgrid, Endeavour Energy, and Essential Energy in a joint submission), Squadron Energy, the Clean Energy Council, and the NSW Net Zero Commission, share a concern: whether NSW's electricity infrastructure can absorb demand growth of this scale without compromising reliability, price stability, or decarbonisation targets.
Environmental and community groups, including the Climate Council, Greenpeace, Friends of the Earth, the Nature Conservation Council of NSW, and the Justice and Equity Centre, do not uniformly oppose data centres but are united against unmanaged growth. Most advocate mandatory renewable energy additionality and water-use restrictions.
Academic and scientific input from CSIRO, the University of Sydney (two submissions), UNSW's Institute for Industrial Decarbonisation, and ATSE urges systems-level planning over project-by-project assessment. IPART contributes on infrastructure pricing and consumer protection. Water utilities (the Water Services Association, Veolia), workforce bodies (Future Skills Organisation), planning consultants (Urbis, the Property Council), and construction firms (Gamuda Australia) round out the field.
Energy and Grid Impact
NSW electricity demand is forecast to grow from 64 TWh in 2026 to 81 TWh in 2035. Data centres alone are expected to contribute 8 TWh of that growth, according to the NSW Net Zero Commission. Transgrid reports it has received over 10 GW of data centre connection enquiries in the past 18 months, with around 6 GW progressing to formal applications:
"The scale, concentration and pace of proposed data centre development represent a material step change in electricity demand."
Squadron Energy projects Australian data centre capacity will grow from approximately 0.45 GW today to between 2.2 and 3.2 GW by 2035, consuming 8 to 11 per cent of national electricity. The scale of grid infrastructure required is a theme covered in From $136 Billion in Proposals to 12-Month Approvals: How NSW Is Competing for Data Centre Investment.
Renewable Energy and Additionality
The Clean Energy Council warns that without a requirement for new renewable supply to match new data centre demand, NSW wholesale electricity prices could be 26 per cent higher by 2035, drawing on Baringa analysis for the Clean Energy Finance Corporation. AEMO estimates data centre demand will grow fivefold, from 4 TWh (roughly 2 per cent of NEM supply) in 2025 to 21.4 TWh (around 9 per cent) in 2035.
The NSW Net Zero Commission, Climate Council, Clean Energy Council, Squadron Energy, and the University of Sydney all advocate for mandatory additionality requirements, meaning data centres must fund new renewable generation rather than competing for existing supply. The Climate Council:
"Additionality tests must become a gateway rather than a voluntary requirement."
Industry bodies argue commercial Power Purchase Agreements and voluntary commitments are sufficient. The tension between accelerating investment and grid stability is also addressed in Australia Sets National Expectations for Data Centres and AI Infrastructure.
Water
Sydney Water estimates data centre water demand could reach 250 megalitres per day by 2035, around 25 per cent of Sydney's current total drinking water supply. This figure is cited by both IPART and the City of Sydney. CoNEXA notes a hyperscale facility of 250 MW can consume between 0.88 and 5.5 gigalitres of water per year.
The City of Sydney:
"Potable-water cooling at scale is incompatible with Sydney's long-term water security."
The Water Services Association, Veolia, CSIRO, and Penrith City Council advocate for mandatory recycled water pathways. IPART flags that its developer charges framework, last set in 2018, is due for review beginning May 2026.
Planning Approvals and Strategic Frameworks
The current project-by-project approvals model is criticised from every direction. The Committee for Sydney:
"NSW currently has no overarching spatial strategy for data centre deployment... resulting in a rise in conflicts: over land, over infrastructure capacity, and over community impact."
CSIRO recommends shifting to precinct-scale or corridor-scale cumulative impact assessment. Urbis and the Property Council argue for faster approvals pathways comparable to Victoria's model.
Submission #5, from CertifiedStrategic.com proposes a tiered sustainability standards system. Facilities meeting higher thresholds on power usage effectiveness, water efficiency, and renewable integration would unlock fast-track assessment, backed by a Regional Capacity Allocation Plan linking approvals to infrastructure readiness and a public transparency register for resource consumption.
WinDC argues for distributed, modular nodes aligned with Renewable Energy Zones, noting that large centralised campus models "sit uncomfortably with the way the energy system and land use system in NSW are evolving." This connects to the discussion in When the Cloud Burns: Why Australia Must Win the Race for Sovereign AI Infrastructure.
Community Impact and Land Use
Penrith City Council recommends a moratorium on new applications until utility impacts are understood. Friends of the Earth notes 22 applications were lodged in the first quarter of 2026 alone, carrying a combined power demand of 3.67 GW, equivalent to 1.1 million homes.
The University of Sydney cautions that economic benefit claims must be "tied to concrete channels through which existing residents, workers, and businesses benefit," rather than aggregate productivity metrics. Unions NSW calls for enforceable local content quotas and conditions approval on operators' workplace safety records.
Workforce
The Future Skills Organisation and Powering Skills Organisation identify a structural gap:
"There are no nationally accredited training pathways into data centre operations anywhere in Australia, and employers are filling that gap at their own cost."
Areas of Consensus
Data centres are critical infrastructure. This is shared by industry, government, academia, environmental groups, and utilities.
The project-by-project approvals model is inadequate at this scale.
Existing electricity and water customers must not subsidise new commercial loads. Transgrid's formulation, "existing electricity consumers must be no worse off," is echoed across submissions.
Recycled water should be the default for cooling, with near-unanimous support for mandatory non-potable water requirements.
NSW competes globally for this investment. The debate is about conditions, not whether to seek it.
Where Submissions Diverged
Mandatory renewable energy additionality. Environmental groups, the Net Zero Commission, and the Clean Energy Council want it as an approval gateway. Data Centres Australia and the Business Council argue voluntary mechanisms are working and that mandates create investment risk.
Approvals pace. Industry, Urbis, and the Property Council want approvals accelerated. Penrith City Council, Friends of the Earth, and the Justice and Equity Centre want them paused or tightened. This reflects a capacity constraint in utility planning cycles, which operate on timescales that current approvals processes do not match.
Cost allocation. The "causer pays" principle has broad support, but speculative connection applications make network planning unreliable. Transgrid notes many of its 10 GW in enquiries may not convert. How to distinguish genuine projects from speculative ones, and how to price grid and water augmentation accordingly, remains unresolved.
Public transparency and reporting. Environmental groups, the University of Sydney, and CertifiedStrategic.com call for public registers of resource consumption and mandatory performance disclosure.
Key Data Points
Metric | Figure | Source |
New private-sector data centre projects announced March 2026 | $51.9 billion | Unions NSW |
Data centre connection enquiries to Transgrid (18 months) | 10 GW (approx. 6 GW in formal application) | Transgrid |
State Significant Development projects in NSW planning pipeline | $29.4 billion (incl. $21B in Greater Western Sydney) | NSW DPE |
Estimated data centre water demand by 2035 | 250 ML/day (approx. 25% of Sydney's drinking water supply) | Sydney Water |
Data centre contribution to NSW electricity demand by 2035 | 8 TWh (within 17 TWh total growth) | NSW Net Zero Commission |
Projected NSW wholesale electricity price increase by 2035 without additionality | 26% | Baringa / CEFC |
Economic output per TWh attributed to technology sector | $12.6 billion GVA | CSIRO, BCA, DCA |
Additional investment required to double national DC capacity by 2030 | $26 billion | CSIRO |
What to Watch
Public hearings are scheduled for 1, 8, and 22 May 2026. The final report is due 30 September 2026.
The hearings will test positions that submissions have only partially revealed. How industry bodies respond to mandatory additionality proposals under questioning. Whether councils can articulate workable alternatives to both moratoria and unmanaged growth. What IPART's developer charges review signals about infrastructure cost recovery.
The September report lands in a context shaped by early 2026 investment announcements, including the Macquarie Technology Group's $200 million NRFC deal and AirTrunk's position that Australia has a 12-to-18-month window to capture its share of global AI infrastructure investment. The 15 State Significant Development projects currently in planning represent $29.4 billion in committed or near-committed capital. Any framework the committee recommends will need to operate on a pipeline already in motion, while establishing conditions that are financially sustainable for utilities, environmentally credible, and acceptable to the communities where the industry has chosen to concentrate.