Australia Data Center Cooling Market Size, Share and Outlook - Growth Analysis Report and Forecast Trends (2026-2035)

Market Overview

The Australia data center cooling market is moving from a commodity air-conditioning purchase to an engineered thermal platform. Chilled water plant and room units still carry most revenue, but liquid hardware is being specified at the design stage of new AI halls, and water and efficiency rules now influence which technology is approved.

Three forces shape the outlook: a connection pipeline that dwarfs existing capacity, tightening water supply in Sydney and Melbourne, and state rules that reward efficient and recycled-water cooling. Together they favour closed-loop, liquid-ready and hybrid designs.

In March 2026, the Australian Government released national expectations for data centre developers, including efficient cooling and non-potable water. In August 2026, New South Wales published efficiency thresholds, and AEMO raised its data centre electricity forecast.

Key Market Trends and Insights

• Power demand: In August 2026, AEMO forecast data centre consumption in the National Electricity Market rising from about 5 TWh today to about 34 TWh by 2035-36, lifting the heat to be removed.
• Water pressure: In June 2026, Sydney Water said data centres could use about 250 megalitres a day within a decade, and no Australian utility has spare capacity on that scale.
• Contracted scale: In May 2026, CDC Data Centres announced a 555 MW contract, which it described as the largest data centre deal in Australia, with deployment across its developing campuses.
• Efficiency rules: In August 2026, the New South Wales guidelines set a design PUE of 1.25 or lower with a design WUE of 1.0 or lower for potable supply.

Australia Data Center Cooling Market Size and Forecast

The market is shifting from air-cooled halls designed for modest racks towards liquid-ready campuses built for AI accelerators. Air-based cooling remains the largest technology, while direct-to-chip liquid cooling grows fastest and immersion advances from a small base. Chillers and heat rejection lead components, with coolant distribution units gaining share. Colocation facilities lead by type, and hyperscale and AI campuses grow quickest. New South Wales is the largest region, with South Australia expanding fastest as large power-led campuses are planned. Water rules, recycled supply and closed-loop design shape equipment choices throughout.

Key Takeaways: Australia Data Center Cooling Market

Liquid Hardware Reshapes Spending

Revenue is on course to expand almost fourfold across the decade, from AUD 760.00 million in 2025 to AUD 2,943.53 million in 2035 at a 14.5% CAGR. New AI halls are specified around liquid loops, and retrofit work follows.

Hyperscale Campuses and Coolant Distribution Lead

Direct-to-chip liquid cooling grows at an estimated 24.0% CAGR and coolant distribution hardware at an estimated 22.0% CAGR through 2035. Hyperscale and AI campuses advance at an estimated 17.6% as contracted capacity is built.

Water and Power Become Design Constraints

Utilities and regulators now treat cooling water as a planning issue, so closed-loop and recycled-water designs gain a commercial edge over open evaporative systems.

• About 250 megalitres a day of Sydney demand within a decade
• About 34 TWh a year of data centre electricity by 2035-36
• Design PUE of 1.25 or lower in New South Wales guidelines

Australia Data Center Cooling Market Report Summary

Key Insight

Surging AI-driven capacity, higher rack densities and tightening water rules push operators towards liquid-ready, closed-loop designs. Air systems still lead revenue, but liquid hardware and large campuses grow far faster.

Key Trends in the Australia Data Center Cooling Market

The Australia data center cooling market is being reshaped by state efficiency thresholds, water supply limits, national expectations and utility signals about how much water new campuses may seek.

August 2026 - New South Wales Sets Efficiency and Cooling Water Rules

• On 17 August 2026 the New South Wales Government released its Data Centre Policy Framework, with design PUE and WUE thresholds for qualifying projects.
• Projects using evaporative, adiabatic or other open-loop cooling must use recycled water or agree to a rainfall-independent supply with the utility.
• Guidelines will be reviewed annually, and an IPART review of data centre water service costs forms a third pillar.

June 2026 - Sydney Water Warns of Large New Demand

• At a Sydney summit on 10 June 2026, Sydney Water said data centres could use about 250 megalitres a day within the next decade.
• One facility needs about 5 million litres a day, and Sydney Water has signed 12 confidentiality agreements with technology companies.
• Its head of business development said no Australian utility has spare capacity of that scale.

March 2026 - National Expectations Put Cooling Efficiency on the Agenda

• On 23 March 2026 the Australian Government released its Expectations of Data Centres and AI Infrastructure Developers.
• The water expectation calls for efficient cooling technologies, non-potable water where possible and transparent reporting of water use.
• The expectations are not legislated, but aligned proposals receive priority in Commonwealth regulatory assessments.

December 2025 - Utilities Report Very Large Water Applications

• A December 2025 Water Services Association of Australia report said utilities were receiving applications of 5 to 40 million litres a day per proponent.
• The upper end is up to 20 times the largest existing single drinking water customer.
• The findings sharpen interest in closed-loop and liquid cooling designs that cut make-up water.

Key Insight

Regulators and water utilities are turning cooling from a back-of-house choice into a planning test. Closed-loop, recycled-water and hybrid designs gain favour, while open evaporative systems face tighter conditions.

Recent Market Developments in the Australia Data Center Cooling Market

Recent developments, presented from the most recent, show the Australia data center cooling market moving through liquid cooling showcases, recycled water supply and large campus investment.

September 2026 - NEXTDC Liquid Cooling Centre Wins an Industry Award

• On 8 September 2026 NEXTDC shared the Innovation Achievement Award at the inaugural Data Centres Australia Excellence Awards in Melbourne.
• The award recognised the Liquid Cooling Centre of Excellence, a live direct liquid-cooled AI environment inside S3 Sydney.
• NEXTDC built the centre with technology partners including Vertiv, Dell Technologies, SRA Solutions and Castrol.

June 2026 - Greater Western Water to Supply Recycled Water for Cooling

• On 18 June 2026 Greater Western Water said its Melton Recycled Water Plant would supply a planned Amazon Web Services data centre in western Melbourne.
• The recycled water will be used for cooling, and it is expected to be the first such connection for a Victorian data centre.
• A AUD 70 million second phase of plant upgrades is set to begin construction next year.

December 2025 - AirTrunk Commits More Than AUD 5 Billion to Melbourne MEL2

• On 24 December 2025 AirTrunk announced MEL2, a campus in Melbourne's north-west with more than 354 MW of capacity.
• Its combined Melbourne investment will exceed AUD 7 billion, with deployable capacity above 630 MW.
• AirTrunk says it has tested new cooling methods for dense AI workloads and deployed large-scale direct-to-chip cooling in Malaysia.

August 2025 - CDC Plans a Liquid-Cooled Campus in Perth

• In August 2025 CDC Data Centres announced a campus at Maddington, Western Australia, with up to 200 MW of high-density capacity.
• The first stage is valued at AUD 415 million, with operations expected in 2026.
• The design includes advanced liquid cooling and a closed-loop primary cooling system with zero water consumption.

Key Insight

Recent events show operators proving liquid cooling in live halls, securing recycled water and committing large sums to new campuses, with design choices increasingly shaped by water and power access.

Australia Data Center Cooling Industry Segmentation

The Expert Market Research’s report on the Australia Data Center Cooling Market offers a detailed analysis of the market based on the following segments.

Market Breakup by Cooling Technology

• Air-Based Cooling
• Direct-to-Chip Liquid Cooling
• Immersion Cooling
• Rear-Door and Hybrid Cooling
• Others

Air-Based Cooling leads revenue, using room units and chilled water plant across the existing fleet. Direct-to-Chip Liquid Cooling grows fastest at an estimated 24.0% CAGR, as shown by NEXTDC's liquid-cooled AI environment at S3 Sydney, recognised in September 2026, and CDC's liquid-cooled Maddington design announced in August 2025. Immersion Cooling advances at an estimated 19.0% from a small base in research and specialist AI sites. Rear-Door and Hybrid Cooling suits retrofits, and the New South Wales guidelines of August 2026 point to hybrid systems that cut water use in drought.

Market Breakup by Component

• Chillers and Heat Rejection
• CRAC and CRAH Units
• CDUs and Liquid Cooling Hardware
• Pumps, Piping and Controls
• Installation and Maintenance Services
• Others

Chillers and Heat Rejection lead, and the open-loop water conditions in New South Wales guidelines of August 2026 favour closed-loop and dry heat rejection. CRAC and CRAH Units stay essential in air-cooled halls but grow slowly as densities rise. CDUs and Liquid Cooling Hardware grow fastest at an estimated 22.0% CAGR, with Schneider Electric launching two Motivair CDU models in December 2025. Pumps, Piping and Controls benefit from water metering expectations. Installation and Maintenance Services scale with NEXTDC's built capacity of 287.9 MW, reported in August 2026.

Market Breakup by Data Centre Type

• Colocation Data Centres
• Hyperscale and AI Data Centres
• Enterprise and Government Data Centres
• Edge and Others
• Others

Colocation Data Centres lead revenue, with NEXTDC reporting 740.1 MW of contracted utilisation in August 2026. Hyperscale and AI Data Centres grow fastest at an estimated 17.6% CAGR, supported by CDC's 555 MW contract of May 2026 and AirTrunk's MEL2 campus announced in December 2025. Enterprise and Government Data Centres advance steadily, with CDC's Maddington campus targeting sovereign and defence users. Edge and Others covers smaller regional and telecommunications sites, which mostly use packaged air systems.

Market Breakup by Region

• New South Wales
• Victoria
• Queensland
• Western Australia
• South Australia
• Others

New South Wales dominates through Sydney's campus cluster, growing at an estimated 13.8% CAGR while Sydney Water's June 2026 warning and the August 2026 framework shape cooling choices. Victoria follows at 14.6%, with AirTrunk's MEL2 and recycled water for cooling announced in June 2026. Queensland grows at 15.2% from Brisbane campuses. Western Australia advances at 16.4%, led by CDC's Maddington campus. South Australia is fastest at 17.2%, after IREN signed a transmission agreement for an 800 MW campus at Bundey in June 2026. Others covers Tasmania, the ACT and the Northern Territory at 12.6%.

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If you choose to purchase the full report at a later stage, the amount already paid will be adjusted, and you will only need to pay the remaining balance.

Competitive Landscape in the Australia Data Center Cooling Market

Competition spans data centre operators that specify cooling, global thermal and power suppliers, and local installers. Barriers include liquid cooling expertise, vendor approvals, water-efficient design capability and service reach across state capitals.

NEXTDC

NEXTDC is an ASX-listed Australian operator whose campuses include S3 Sydney and sites in Melbourne, Brisbane and Perth. In August 2026 it reported 740.1 MW of contracted utilisation and 287.9 MW of built capacity. In September 2026 its Liquid Cooling Centre of Excellence at S3 Sydney shared an industry innovation award with Vertiv.

AirTrunk

AirTrunk, headquartered in Sydney, builds hyperscale campuses across Asia Pacific, including five in Australia with more than 1.2 GW combined. On 24 December 2025 it announced MEL2 in Melbourne's north-west, with more than 354 MW and over AUD 5 billion of direct investment. It has deployed direct-to-chip liquid cooling at scale in Malaysia.

CDC Data Centres

CDC Data Centres, headquartered in Canberra, operates hyperscale and government-focused campuses in Canberra, Sydney and Melbourne. In May 2026 it announced a 555 MW contract with a United States customer, to be deployed from CDC's campuses over the following years. Its Maddington campus in Perth, announced in August 2025, uses liquid cooling and closed-loop primary cooling.

Vertiv

Vertiv, headquartered in Westerville, Ohio, supplies thermal management, power and monitoring systems to data centres worldwide, including Australia and New Zealand. In September 2026 it shared the Innovation Achievement Award at the Data Centres Australia Excellence Awards with NEXTDC for the liquid-cooled AI environment at S3 Sydney.

Other players operating in the Australia data center cooling market include Schneider Electric, Stulz, Daikin Australia, Equinix, and Digital Realty, alongside mechanical contractors, building services engineers, water treatment specialists and independent maintenance providers supplying cooling plant and services across Australia.

Key Insight

Competition rests on liquid cooling engineering, vendor partnerships, water-efficient design and national service reach rather than price. Operators with scale shape specifications, while suppliers win through proven live deployments.