At a glance
Sydney Water's A$1.2 billion Badu Yarragul Water Resource Recovery Facility at Kemps Creek opened in September 2026, and the utility has confirmed it will supply recycled water to data centres in Western Sydney.
The plant treats 35 megalitres of wastewater a day, about 14 Olympic swimming pools, and is built to reach 70 megalitres as the area grows.
Managing director Darren Cleary said supply to data centres will be built without affecting other customers: "fundamentally they'll pay their way".
NSW's data centre guidelines say recycled water should be prioritised for cooling, and Kemps Creek puts a recycled source in the region where much of Sydney's data centre build is happening.
A second Sydney Water plant at Camellia-Rosehill, due by 2032, will also supply recycled water to data centres.
Sydney Water has earmarked recycled water from its newest treatment plant for data centres. The Badu Yarragul Water Resource Recovery Facility at Kemps Creek, in Western Sydney, opened in September after builder John Holland completed it on time and on budget. It treats wastewater to a standard suitable for industry, business, agriculture, public open space and non-drinking use in homes. "There's a real opportunity for this to be used for data centres," Sydney Water managing director Darren Cleary told the ABC on 6 October 2026.
The plant puts a recycled water source inside Western Sydney, so the supply Sydney Water builds for data centres can cool their equipment with treated wastewater instead of drinking water.
The Kemps Creek plant treats 35 megalitres a day
The plant treats 35 megalitres of wastewater a day and Sydney Water plans to double that to 70 megalitres as the population grows. John Holland describes it as capable of treating up to 70 megalitres a day at full capacity. Reverse osmosis, which pushes water through a fine membrane to strip out contaminants, produces the recycled water, and more than 40 kilometres of new pipelines carry treated water and brine away from the site.
A 4MW solar farm on site makes the facility 50% energy self-sufficient, and John Holland says the project was the first to achieve a 2.1 rating from the Infrastructure Sustainability Council, the industry body that scores infrastructure projects. The plant has capacity to connect 140,000 new homes and businesses, including the new Western Sydney International Airport, and Sydney Water's project page puts the population it will serve at about 400,000 people by 2056.
Data centres are one customer group among several on a plant sized for a fast-growing region that includes an international airport.
Data centres will pay for the supply built for them
"The infrastructure that will be delivered for them [data centres] will have to be done in a way that doesn't affect the services we provide to the broader customer base," Cleary said. "So fundamentally they'll pay their way." Sydney Water is investing A$14 billion in capital over the next five years to make sure demand is met.
The NSW Government is moving the same way. Premier Chris Minns has asked IPART, the state pricing regulator, for a framework under which data centres fund their own water, covering "the upfront and ongoing costs of providing them water services including augmenting capacity". Submissions on the draft terms closed on 2 October. In its September 2025 pricing decision, IPART recorded Sydney Water's estimate that data centres may need up to 250 megalitres a day by 2035, and pointed to upfront developer charges, negotiated agreements and recycled water as the ways to serve them.
User pays is now the stated position of both the utility and the state: data centres fund the water supply built for them.
Recycled water costs less a kilolitre than drinking water
Sydney Water's published business prices for 2026-27 put recycled water at A$3.07 a kilolitre against A$3.41 for drinking water. Drinking water moves to a higher drought rate when Greater Sydney's dam storage drops below 60%, and Sydney Water's list carries no drought rate for its recycled water. These are the published usage rates; terms for a large site such as a data centre are negotiated with the utility, and IPART's review will set how they are priced.
Water type | Standard rate | Dam storage below 60% |
|---|---|---|
Drinking water | A$3.41 per kL | A$3.84 per kL |
Recycled water | A$3.07 per kL | No drought rate listed |
Source: Sydney Water business prices, 2026-27.
On the published list, recycled water costs 34 cents a kilolitre less than drinking water, and the gap widens to 77 cents when the drought rate applies.
NSW guidelines ask data centres to use recycled water first
The NSW data centre guidelines published on 17 August state: "If water is required for cooling, recycled water should be prioritised." They name evaporative, adiabatic and other open-loop systems, all of which lose water to the air, as water-intensive cooling. Sites using those systems are asked to run them entirely on recycled water, or to have a "clear agreement in place with their water utility for the transition to rainfall-independent water".
Cooling is the reason an AI data centre uses water at all, and the guidelines depend on recycled supply being available. In July NEXTDC moved OpenAI's S7 campus at Eastern Creek to a waterless cooling design after the recycled water pipeline it wanted had no planning permission. "Recycled water has real merit and it can support lower PUE and better overall sustainability," chief executive Craig Scroggie said at the time. "In Western Sydney, the enabling infrastructure is not yet in place."
Kemps Creek is a large recycled water plant operating in the region Scroggie was describing, and the supply Sydney Water builds from it for data centres is the enabling infrastructure the guidelines depend on. AWS has shown how the arrangement works in Victoria, where it signed to draw recycled water for the hot days its western Melbourne site cannot cover with outside air.
Camellia-Rosehill adds a second source by 2032
Sydney Water has confirmed that its planned treatment plant at Camellia-Rosehill, near Parramatta, will also supply recycled water to data centres. The plant is designed to treat 70 megalitres a day, with construction to start in 2028 if approved and completion due in 2032.
Treating recycled water to drinking standard, as Perth does, is a separate long-term option under the NSW Government's Greater Sydney Water Strategy. Cleary said that is "a question for community and government about whether that is something that they would accept and value", and that a decision is needed within the next 10 years.
With Kemps Creek operating and Camellia-Rosehill in planning, Sydney Water is building recycled supply for data centres in western and central Sydney that sits outside the drinking water system. The operating and planned facilities that could draw on it are in the directory of Australian data centres.
What to watch
The first supply agreement. The first data centre connection signed from Kemps Creek will show the price, volume and terms.
IPART's final terms. The Premier's final terms of reference start the nine-month review that sets how data centres pay for water across NSW.
The step to 70 megalitres. The timing of the plant's expansion will track how quickly Western Sydney's homes, businesses and data centres connect.
Camellia-Rosehill approval. Construction is due to start in 2028 if the plant is approved, adding a second recycled source for Sydney's data centres.