Regional communities on edge at rapid boom in data centres

Words by Samantha Hutchinson for The Australian

Peter Martin is astonished. The former Rothschild investment banker-turned-conservationist who waged a ferocious and successful battle fighting the Hume Coal Mine in the NSW Southern Highlands has watched, incredulous, as community sentiment across the suburbs and the regions has curdled against a new environmental opponent.

“It took us 10 years on coal to get to the point where coal mines were something people didn’t want, but data centres … it’s been six months,” he told The Weekend Australian. “As an issue, it’s turbocharged, and people are rightly upset.”

Martin, 76, has been involved in a community effort opposing a data centre and cluster of gas-fired plants proposed by private company Cloud Carrier to be spread across a 67ha parcel on the outskirts of Moss Vale, about 1.5 hours south of Sydney.

Once built, the campus – about the size of 90 football fields – could have up to three data centre buildings with 19 to 20 data halls, and attached generator infrastructure including a mammoth 673MW gas-fired power plant with enough grunt to power 70,000 homes, or the Port Kembla steelworks six times over.

A smaller gas plant attached to the development has been the subject of a multi-day hearing in the NSW Land and Environment Court appealing a local council ruling blocking its construction.

Environmental concerns

Witnesses throughout the hearing aired their concerns regarding its impact on emissions, air quality and the water supply in a catchment so close to Sydney. Others, some of whom had originally coalesced around community groups such as Lock the Gate over the Hume Coal proposal, expressed fears about the visual impacts of the campus overlooked by homes in a picturesque semirural region, and the benefits – jobs, contributions and otherwise – the community will receive in exchange for hosting the imposing infrastructure.

In South Australia, Firmus attempted to convince Tailem Bend locals of the benefits of a planned data centre. Pic: Matt Turner, as appeared in The Australian

Their concerns were united by a throughline: a community feeling left in the dark by a little-known operator using a piecemeal planning process to build large-scale infrastructure that, for many sections of the community, is still facing an uncertain outlook for demand, financing and integrity.

“We’ve got next to no information about the proponents, no information about the clients (for the data centre’s storage) and it’s just a pig and poke. It’s a case of an operator having a go about getting it up and running and then seeing what happens,” Martin said.

“They’re making all sorts of promises but there’s just no real information … and in Ireland, the US, you’ve got tech bros trying it on everywhere. It has all the hallmarks of a huge bubble.”

A perfect storm

In a torrid month for the neocloud sector where share prices and valuations of one-time market darlings like NextDC and Firmus have plummeted, community concerns about the potential environmental impact of data centres – which once centred on water usage, energy intensiveness, noise and the invasiveness of transmission links – have now been replaced by questions about the life of the assets, real versus perceived demand for data storage, and whether communities will be lumped with white elephants and stranded assets.

A Tasmanian challenge

On Tasmania’s north coast where beleaguered neocloud developer Firmus is proposing to build two data centres at Bell Bay near Georgetown and Wesley Vale on the island’s north and northwestern coasts, former Greens senator Christine Milne is working alongside the Bob Brown Foundation to call for a moratorium on all data centre development until more is known about the industry, demand for data storage, and its operators.

Former senator Christine Milne and one-time leader Bob Brown. Pic: Nikki Davis-Jones, as appeared in The Australian

Early community and Greens opposition to the developments centred on a requirement for the plants to be linked to transmission lines which would track across delicate habitat and nature reserves of Whaleback Ridge.

Other concerns have centred on water requirements; in particular a Firmus announcement it planned to use water from Tasmania’s state-owned irrigation scheme for its data centres, despite Tasmanian Irrigation publicly announcing it had given no such undertaking, and its purpose is for agriculture and hydrogen production.

A plan to supplement the data centres’ energy requirements using a biomass generator fuelled by woodchips also riled some of the more environmentally sensitive areas of the community. But alike the Southern Highlands community, concerns about the operator are equally unsettling for the community.

CDC Data Centres chief executive Greg Boorer. Pic as appeared in The Australian

“I don’t trust Firmus one bit,” Milne said. “And it’s a serious risk for a state to allocate 440MW – a vast amount of the state’s energy supply – to just one company which has a dubious track record to date, an IPO that has failed, and a CEO who has openly stated that narrative is just as important as engineering.

“We don’t want to end up with stranded assets. We need to be asking what other opportunities in Tasmania would benefit from receiving that extra energy (or water) supply.”

Plan first, consult later

Even data-centre proponents argue the breakneck speed at which data-centre operators have cropped up has been unnerving for communities. It also means that many operators have made their first investments without having first built goodwill or familiarity on the ground.

In Wagga Wagga, NSW, where Greg Boorer’s CDC has proposed a $15bn, 1.4GW data centre campus next to a tip about 11km south of the inland city, Deputy Mayor Georgie Davies is looking forward to a public engagement program ramping up to help dispel concerns and misinformation about the development, and to promote its benefits.

In contrast to local energy giants HumeLink and Transgrid whose public engagement programs – and enormous infrastructure builds in the region – have meant that locals can visit a shopfront and a local engagement to air concerns, data-centre operators have been more elusive to the community.

A regional opportunity

As a member of council, Davies has pored over details of the development, including its water-cooling plans (which use an Olympic pool’s worth of water on a closed circuit, with annual top-ups of 1% to 2%) and has also probed its energy demands, to allay resident concerns its energy load could trigger blackouts or energy price rises.

For its part, the Gregadoo data centre will connect directly to Transgrid infrastructure and is separate from the Wagga grid.

“This is all uncharted territory for communities and it’s completely new. They’ve got no other projects to compare it to,” she said. “But they haven’t yet seen a project bring benefits of this scale either.”

CDC’s proposed Gregadoo data centre at Wagga Wagga. Pic as appeared in The Australian

CDC’s Gregadoo development stands to bring 200 permanent jobs to Wagga, with an average salary of $180,000 to $200,000 per year, and an additional 30 to 40 positions in companies attached to the data centre. For Davies, that’s a handsome injection in Wagga civic and economic life, demanding more services like hairdressers, butchers and coffee shops, more families in town, buying and renting more homes.

A $150m development contribution to council will strengthen finances to keep council rates low and to help fund services, while another $75m contribution will be jointly decided by CDC and the council. Another $25m will be allocated to community grants.

For Davies, it’s a boon for local businesses, down to students who are looking at a strengthening pipeline of jobs they used to have to leave Wagga to find.

The same sentiment has been echoed by Queensland’s Western Downs Regional Council Mayor Andrew Smith, who has greeted AI giant Anthropic’s plans to build a $32bn data centre at Dalby as an economic generator akin to what coal-seam gas has brought the region.

“Prior to coal-seam gas, we were exporting a lot of our clever kids, because the opportunities weren’t back in the region,” Smith has told local media, even as he has stopped short of supporting or opposing the project.

Work to do

In Wagga, Davies is equally astonished by the pace of change in the industry and says there is more work to bring the community along.

“Who would have thought at the start of this year that we would be talking about data centres,” she said.

“But there’s still a way to go for people to wrap their heads around it. People ask me, ‘why do we need this? Is it because we’re using AI?’ without realising this is what we rely on for everything … internet banking, online shopping, we’re totally dependent.

“This is critical for our everyday lives and they’re going to be built no matter what. Why not Wagga?”

This article first appeared in The Australian as Regional communities on edge at rapid boom in data centres.

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