‘Tech bro concierge service’: State pressured to crack down on data centre clusters

Smarter planning controls encouraging artificial intelligence companies to develop in special precincts would avoid unwanted US-style data centre clusters in Sydney’s densely populated suburbs, a parliamentary inquiry has found.

The committee found that in Sydney, data centre clusters are being built in areas like Lane Cove and Ryde simply because AI companies driven by market forces have found the capacity happens to exist there, not because of effective planning.

The state should instead plan for large-scale data centre development in precincts, supported by shared energy and water infrastructure, rather than as isolated developments, the inquiry found.

Lane Cove has become a suburban battleground between AI companies and angry locals, after a cluster of data centres began opening in industrial-zoned parts of the suburb. Community backlash led to data centre proponent Goodman to abandon their $1.2 billion proposal. Now locals in other parts of the state are looking to launch similar campaigns.

Among the 23 recommendations was a request that the government change planning requirements to place a greater emphasis on assessing the cumulative impacts of data centres, and to require AI companies to properly listen and respond to community concerns.

The inquiry also found the state government took an “entirely backwards” approach to data centre planning by opening up fast-track processes, including through the Investment Delivery Authority, but didn’t release data centre guidelines until a year later.

That authority has endorsed at least 15 data centre projects in NSW valued at $51.89 billion, and the state has more than 60 data centres already operating or under construction.

Committee chair and Greens MP Abigail Boyd said fast-track processes like the Investment Delivery Authority, which she dubs the “tech bro concierge service”, are leading to growing anguish in communities concerned about data centres popping up in their backyards.

She pointed to this week’s midterm election results in the US, where anti-data-centre Democrats swept gubernatorial races.

“Unless we want to be where America is now, if we want to have actual sensible investment in data centres we need to slow down, pause those approvals and give the community time to breathe,” she said.

“If we don’t actually do what we’ve recommended in our report we will end up with people just getting angrier and angrier.”

The state government recently removed council powers to automatically trigger a referral to the independent planning commission when they object to a state significant data centre, and increased the number of public objections needed to trigger a referral from 50 to 100.

Prime Minister Anthony Albanese has said new data centre projects must pay for their own energy, and must put at least as much energy back into the grid as they take out of it. The NSW inquiry found the rapid growth in electricity demand from data centres has the potential to hinder progress towards emission reduction targets if that growth isn’t matched by a similar growth in energy storage.

Data centre proponents will have access to a 75-day express assessment process only if they comply with the state’s new data centre guidelines, which include funding additional water and energy supply.

The report stopped short of calling for a pause on new data centre approvals after Labor and Liberal committee members voted together to remove the recommendation from the report. Lane Cove and Penrith councils used their evidence to call for a moratorium on new data centre approvals, citing concerns over community consultations and water and energy consumption.

A NSW government spokesperson said many of the committee’s findings reflected what the government already heard while designing the state’s guidelines.

“This growing industry can also help support new investment in the renewable energy projects the state needs, so a moratorium is not the answer.”

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