Can data centres strengthen WA’s energy future?

As Western Australia accelerates its energy transition, a new challenge is coming into focus. Data centres, the digital infrastructure underpinning cloud computing, artificial intelligence and critical services, are driving a surge in electricity and water demand. Their round-the-clock energy requirements and cooling needs are placing pressure on grids already managing the retirement of coal generation and the integration of variable renewables. Without careful planning, these facilities risk deepening constraints on both energy and water systems.

Yet the same developments creating these pressures also present an opportunity. Rather than standalone facilities, data centres can be designed as part of integrated precincts that strengthen the reliability and sustainability of the networks around them. With integrated planning across power, water and land use, they have the power to anchor renewable generation, support grid stability and accelerate investment in shared infrastructure that benefits both industry and the wider community.

The case for integrated utility precincts

The next phase of Western Australia’s digital growth will depend on how effectively new data centres are embedded within the state’s existing infrastructure. Standalone developments have delivered early market success, but the model is showing strain as connection capacity, land availability and water security tighten.

An integrated utility approach offers a more coordinated and resilient alternative. Co-located data centre precincts with shared energy, water and cooling infrastructure enable new developments to operate as part of a broader network rather than as isolated loads.

Within these precincts:

• Renewable generation and storage can be developed nearby to reduce transmission losses and relieve grid congestion.
   
• Hybrid power systems can combine renewables, firming capacity such as gas peaking and battery storage to deliver reliable, low-carbon supply.
   
• Recycled and non-potable water networks can meet cooling needs without drawing on potable supplies, a vital consideration in Western Australia’s dry climate.
  
  
• Waste-heat recovery and shared cooling systems can improve overall energy efficiency and create benefits for neighbouring industries or communities.

For government and utilities, integrated precincts reduce duplication and improve long-term planning efficiency. For investors and developers, they offer opportunities to share capital costs and secure access to reliable, renewable energy. And for communities, they ensure essential services and infrastructure are designed for resilience, sustainability and local benefit.

Why Western Australia is well placed

Western Australia’s long history of complex infrastructure delivery provides the foundation for this next step. The state’s industrial hubs, from Kwinana to the Pilbara, already demonstrate how shared utilities can lower costs, reduce risk and attract long-term investment. That same collaborative approach can now be applied to the digital infrastructure sector.

The state government’s Energy Transformation Strategy emphasises that the energy transition must be guided by coordinated planning across generation, network and demand. Data centres, as long-term and predictable loads, can help shape that coordination by providing anchor demand for new renewable, firming and storage capacity. Planning these facilities alongside renewable energy zones, transmission upgrades and water recycling schemes would create efficiencies that extend beyond individual projects. 

Water management is another area where Western Australia can lead. The state’s established expertise in large-scale desalination and wastewater recycling provides a blueprint for sustainable water-based data centre cooling solutions. Co-located sites with recycled-water networks or treatment plants can significantly reduce pressure on potable supplies and contribute to a circular approach to resource management.

These factors place the state in a unique position: while eastern states are grappling with grid congestion, constrained land availability and growing competition for resources, Western Australia has the opportunity to act early and embed integrated planning into the next phase of digital infrastructure development.

Planning for integration

Realising this opportunity will require policy alignment and early collaboration between government, industry and utilities. Key actions include:

• System planning
  Including projected data centre demand within AEMO and government forecasts to align generation, transmission and storage investment.
   
• Precinct zoning
  Identifying locations where shared fibre connectivity, energy, water and cooling infrastructure can be developed collaboratively to reduce risk and duplication.
   
• Approval pathways
  Streamlining planning processes for precinct-scale developments that deliver system-wide benefits.
   
• Water policy
  Incentivising recycled and non-potable water use for data centre cooling and operations, reducing pressure on drinking-water supplies.
   
• Performance metrics
  Expanding beyond Power Usage Effectiveness (PUE) to measure renewable share, water reuse and waste-heat recovery.

Designing for resilience

Data centres will play a defining role in the future energy landscape, and Western Australia has the capability and foresight to lead this shift. With collaborative planning, shared utilities and targeted policy reform, the state can demonstrate how data centres, once seen as energy-intensive consumers, can become catalysts for sustainable growth.

These themes will be discussed at CEDA’s WA Energy Outlook event, where TBH Director Stuart Cassie will facilitate a panel on planning for a more resilient energy system.