The NSW Government's decision to halt new data centre developments in Macquarie Park shouldn't come as a shock. It's part of a broader national shift, echoing the Australian Energy Market Operator's (AEMO) calls for tighter regulation of where and how data centres operate.
This is no longer just about digital demand or real estate. It's about energy security, urban resilience, and infrastructure equity.
Licence to Grow vs Licence to Operate
For years, I've thought of a licence to grow as the stepping stone to a licence to operate. Lose the first, and the second can quickly follow.
I've seen this in two very different industries. When I was Head of Sustainability for Fujitsu's data centres, I watched the sector's rapid expansion outpace conversations about environmental limits. Later, at Fonterra, I saw the reverse: in New Zealand, you cannot simply start a new dairy farm.
From Dairy Herds to Data Racks
New Zealand's dairy industry went through a boom much like the one we've seen in Australian data centres. From 1990–91 to 2017–18, the national dairy herd more than doubled from 2.4 million to 5.0 million cows driven by demand, expanded land use, and better productivity.
But environmental limits eventually caught up. Water use, nutrient runoff, and emissions triggered strict regulations. By 2022–23, cow numbers had fallen to around 4.7 million, and new dairy conversions now require intensive environmental approvals.
The lesson? Growth continues until it collides with physical, environmental, or social limits, then the rules change.
The Data Centre Boom Is on the Same Path
Here in Australia, data centres have enjoyed an unchecked boom, consuming vast amounts of grid energy, water, and emissions capacity, largely without systemic limits.
Now, with NSW's Macquarie Park decision and AEMO's scrutiny, we may be seeing the first signs of the industry hitting its environmental and social ceiling.
The parallels with NZ dairy are hard to ignore:
- Environmental capacity has limits, once reached, expansion is restricted.
- Public trust matters, lose it, and your operating freedom shrinks.
- Licence to grow can vanish, and with it, the licence to operate if adaptation doesn't happen quickly.
Minimum Expectations Are Rising
If the industry wants to avoid a dairy-style clampdown, it must act now. In the near future, the baseline will be far higher:
- Mandatory NABERS Data Centre ratings
- Credible net zero strategies
- Closed-loop water systems
- Transparent emissions reduction plans
- Integration into emergency response plans, freeing power for critical services in a crisis
From Milk to Megawatts, Will We Learn the Lesson?
True sustainability isn't just about hitting carbon and water targets. It's about stepping up to systemic responsibility.
If the data centre sector wants to keep its licence to grow, and eventually its licence to operate, it must lead the change before regulation locks in its limits.
The dairy sector learned this the hard way. The question is: will data centres?