Australia’s largest home-grown data centre operator, NextDC, reports that the rapid adoption of artificial intelligence (AI) has intensified the challenges posed by land and energy demands, exacerbating issues already highlighted by the last decade’s shift to cloud computing.
NextDC, which operates 15 data centres across Australia and has four more in development, is valued at $10.3 billion. David Dzienciol, Chief Customer and Commercial Officer, emphasized that AI-driven expansion, coupled with fluctuating energy prices due to global conflicts and the transition to renewable energy, will inevitably strain energy grids. He stated, “We will need, collectively, to be looking at all alternatives to ensure that we can cope with demand.” The company’s CEO, Craig Scroggie, has previously advocated for considering nuclear energy to support increased computing power.
According to Morgan Stanley, data centres in Australia consume approximately 5% of the nation’s power, equivalent to 1,050 megawatts in 2024, and this figure could rise to between 8% and 15% by 2030. The Australian Energy Council notes that a large data centre can consume as much energy as a small city, highlighting the industry’s significant energy demands.
In addition to energy challenges, the industry is also grappling with high industrial property prices. NextDC, for example, paid $124 million in 2021 for a site in Sydney’s Horsley Park. Dzienciol notes that workloads are increasingly shifting to regional areas, with new sites in Port Hedland, Newman, and Darwin.
This month, NextDC announced its certification by US tech giant Nvidia to support Australian organizations using Nvidia’s GPU platforms. These GPU systems, which are better suited for AI applications than traditional CPU systems, underscore the growing importance of AI in the data centre industry.
Despite the challenges, data centres remain a highly sought-after asset for investors, with long-term contracts offering stability. However, environmental concerns persist, particularly regarding cooling systems that require significant water usage. Dzienciol assured that more information on NextDC’s environmental impact will be released in the company’s upcoming earnings report, reaffirming that AI represents the next major wave in the industry.
