Australia's data centre industry is rapidly expanding, positioning the country as a significant hub for digital infrastructure in the Asia-Pacific region (APAC).

With this rapid growth comes new challenges, particularly in relation to power consumption. Energy demand from data centres increases pressure on Australia's power grid, raising concerns about sustainability and the long-term impact on the national electricity market.  

This article explores the current state of Australia's data centre industry. It presents forecasts of its growth over the next 10 to 15 years and highlights the risks and solutions associated with its energy consumption.... 

The Current State of Data Centres in Australia 

Australia hosts around 231 data centres. Sydney alone accounts for 34.2% of the country’s total market capacity, ranking it the third-largest data centre market in the APAC, with Melbourne in eighth place. Competitive operating costs drive this surge in demand compared to global cities like Singapore and Kuala Lumpur.  

Data centres currently use approximately 5 per cent (1,050 MW) of the electricity on Australia's power grid. Despite this substantial energy use, data centres contribute to energy savings by driving digitalisation across various industries and infrastructure.  

However, many Australian data centres are over 20 years old and inefficiently designed. Data centres must continually improve their energy-saving systems to stay competitive and reliable. 

According to the Australian Energy Council, the government is actively promoting energy efficiency in data centres by setting renewable energy standards.

In some cases, power purchase agreements for renewable energy may offer a cost-effective alternative to lower costs and improve sustainability. For instance, “green data centres” are continuously being developed in Western Australia and the Northern Territory. 

The Risks of Rapid Data Centre Growth on Electricity Consumption

• Grid Strain 

  Data centre energy demand is expected to reach 8% by 2030, with most of the load coming from New South Wales and Victoria. If not matched by an adequate power supply, this increased demand could lead to electrical instability. This is especially true in regions with ageing infrastructure or limited capacity for grid expansion.

  A single large data centre can require the same amount of energy as 50,000 homes. As more data centres come online, the strain on the grid could lead to more frequent power outages, higher energy costs, and increased grid management challenges.

• Environmental Concerns

  Without intervention, the reliance of data centres on non-renewable energy sources can contribute to increased carbon emissions. Rapid expansion could exacerbate Australia's efforts to transition to a cleaner energy mix.

  The sector's growing energy demands are expected to drive up greenhouse gas emissions, particularly if the grid cannot keep pace with the necessary shift to renewable energy.

  As environmental regulations become more stringent, data centre operators should explore more sustainable practices or risk facing fines, operational constraints, or reputational damage.

• Operational Costs

  The average price for the largest industry users in Western Australia was $132.36/MWh. This can quickly escalate for energy-intensive facilities, particularly older data centres with outdated power systems.

  Without significant upgrades, these older centres could see their operational costs skyrocket as electricity prices rise due to increased demand. Additionally, the push towards sustainability means that data centres will need to invest in energy-efficient technologies. 

  This financial burden could be particularly challenging for smaller operators or those with limited resources.

Solutions to Address the Energy Demand in Data Centres

1. Adopt a Scalable Power Supply
   

   A scalable power supply allows data centres to handle growing energy demands better without overburdening the grid. This involves integrating advanced power distribution units and uninterruptible power supplies (UPS) that can be expanded or adjusted according to the facility’s needs.

   IPD’s data centre solutions, for instance, offer future-proofing capabilities and critical power management for uninterrupted operations. Data centres can ensure they only use the energy necessary at any given time, reducing waste and improving overall efficiency. 

   Scalable power solutions also help accommodate future growth. Infrastructures can adapt quickly to changing technological requirements without requiring a complete overhaul. 

2. Invest in Low-Carbon Energy 

   Data centres should invest in low-carbon energy sources to reduce their carbon footprint and mitigate the impact of increasing energy consumption. Some examples are on-site renewable energy installations, such as solar panels or wind turbines, and power purchase agreements (PPAs) for off-site renewable energy. 

   Leveraging low-carbon energy helps meet sustainability targets and can provide long-term cost savings by reducing reliance on fossil fuels and protecting against energy price volatility.  

   The Department of Climate Change, Energy, the Environment and Water also recommends exploring options like fuel cells and tri-generation systems, which can generate electricity, heating, and cooling from a single energy source. 

3. Optimise Existing Equipment 

   Maximising the efficiency of existing data centre equipment is a cost-effective strategy for reducing energy consumption. Operators can do this by conducting regular audits to identify and eliminate inefficiencies, such as redundant servers and outdated cooling systems.

   Implementing airflow management techniques, like hot aisle/cold aisle containment, can prevent mixing hot and cold air, improving cooling efficiency.

   Upgrading to more energy-efficient hardware, such as solid-state drives (SSDs) and variable speed drives (VSDs), can also significantly reduce power usage.

   Another option is to retrofit existing systems with economisers or liquid cooling solutions. This can provide substantial energy savings, allowing the data centre to operate at peak efficiency with minimal environmental impact. 

Addressing the Future of Data Centres and Energy Consumption

As Australia's data centre industry grows, the need for sustainable energy management solutions becomes more pressing. 

Data centres can mitigate the risks associated with increased electricity consumption by integrating renewable energy, optimising existing infrastructure, and adopting a scalable power supply.

While the future of data centres is bright, the industry's success will depend on its ability to balance growth with sustainability. Data centres in Australia are expected to adapt to future developments in energy efficiency while maintaining their operations. 

IPD’s advanced solutions allow data centres to manage their energy consumption, reducing operational costs and contributing to Australia’s sustainability goals.

For more information on data centre solutions, visit www.ipd.com.au.