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

Market Overview

The Australia data center water consumption market is at an inflection point. Direct on-site use is small today, about 5.5 gigalitres a year, but the facilities now being approved are far larger, and water utilities are being asked to plan for them before cooling designs are fixed.

Three forces are shaping the market: state and federal rules that steer operators towards recycled and non-potable water; a shift from evaporative towers to closed-loop and liquid cooling; and utility pricing reviews that make large users fund the infrastructure they require.

In December 2025 the Water Services Association of Australia published its data centre water resource, in March 2026 the Australian Government issued national expectations, and in August 2026 NSW released data centre guidelines while Victoria finalised a sustainable data centre action plan.

Key Market Trends and Insights

• Federal water expectation: The Australian Government's March 2026 data centre expectations ask developers to use non-potable water, efficient cooling and transparent reporting, with aligned proposals receiving faster Commonwealth assessment.
• Recycled water pivot: Greater Western Water agreed in June 2026 to supply Melton recycled water for cooling an Amazon Web Services data centre, a first for Victoria.
• Sydney demand risk: Sydney Water estimates data centres could reach 15 to 20% of supply by 2035, against an industry estimate of 1.9% by 2030.
• Efficiency slippage: NEXTDC's water usage effectiveness rose to 2.40 litres per kilowatt-hour in the year to June 2026 from 2.25, as new capacity ran ahead of IT load.

Australia Data Center Water Consumption Market Size and Forecast

The market is moving from drinking-water evaporative cooling sold on cost towards recycled supply, closed-loop designs and metered, reported consumption. Potable supply and evaporative towers still lead because most existing capacity in Sydney, Melbourne and Brisbane was built around them, while recycled water, liquid cooling and hyperscale campuses advance fastest as approvals tighten. New South Wales remains the largest base, and Western Australia grows quickest from a smaller one. Federal expectations, state action plans and utility pricing reviews underpin a durable, multi-year outlook in which design choices made at approval set water demand for decades rather than a cyclical uplift.

Key Takeaways: Australia Data Center Water Consumption Market

Cooling Choices Lock In Water Demand

Revenue is set to rise from AUD 185.00 million in 2025 to AUD 564.40 million in 2035 at an 11.8% CAGR, as approved designs fix consumption for decades.

Recycled Water and Liquid Cooling Lead Growth

Potable supply remains the largest source, but recycled water grows at an estimated 15.1% CAGR and closed-loop liquid cooling at 13.4% through 2035, driven by state non-potable rules.

Victoria and NSW Set the Regulatory Template

Victoria's August 2026 action plan and the NSW guidelines with an IPART pricing review give operators the clearest design targets and cost rules in the country.

• Design WUE targets of 1.0 potable and 1.6 non-potable in Victoria
• IPART review submissions closed on 2 October 2026
• Developers to fund their share of water infrastructure

Australia Data Center Water Consumption Market Report Summary

Key Insight

Cooling choices made at approval, state rules favouring non-potable supply and rapid capacity growth shape demand. Recycled supply and liquid cooling advance fastest while evaporative towers stay dominant.

Key Trends in the Australia Data Center Water Consumption Market

The Australia data center water consumption market is being reshaped by state design targets, council limits on drinking water, recycled supply for cooling and national expectations.

September 2026 - Victoria Sets Water Targets for New Data Centres

• The Victorian Government's Sustainable Data Centre Action Plan, reported in September 2026, expects open-loop cooling to use recycled or other non-drinking water.
• Design water usage effectiveness targets are 1.0 or lower for potable and 1.6 or lower for non-potable supply, with public reporting required.
• The government said under one per cent of state drinking water goes to data centre cooling today, and that it should be zero.

August 2026 - Toowoomba Council Moves to Bar Drinking Water for Data Centres

• Toowoomba Regional Council voted unanimously on 18 August 2026 for a draft Industrial Water Use Policy banning drinking water in data centre operations.
• Officers receive roughly two data centre enquiries a week, and the draft returns to council by February 2027.
• Pulse Data Centre at Wellcamp already uses a closed-loop system, a model for regional operators.

June 2026 - Greater Western Water Supplies Recycled Water to AWS

• Greater Western Water agreed in June 2026 to supply Melton Recycled Water Plant water for cooling a new Amazon Web Services data centre.
• It is expected to be the first recycled water supply to a Victorian data centre and a first for AWS in Australia.
• A AUD 70 million second-phase Melton upgrade by Guidera O'Connor will lift capacity and recycled water quality.

March 2026 - Australian Government Issues Data Centre Expectations

• On 23 March 2026 three federal ministers announced Expectations of Data Centres and AI Infrastructure Developers, with water as the third expectation.
• Developers are asked to use efficient cooling, non-potable water and circular approaches, and to report water use transparently.
• Aligned proposals receive priority in Commonwealth assessments, while non-aligned proposals face a slower process.

Key Insight

Policy is moving from guidance to design targets, with recycled water connections and drought-ready cooling becoming expected rather than optional across the major data centre states.

Recent Market Developments in the Australia Data Center Water Consumption Market

Recent developments, presented from the most recent, show the Australia data center water consumption market moving from utility pricing reviews and operator disclosures into approvals and national guidance.

September 2026 - NSW Asks IPART to Review Data Centre Water Pricing

• The NSW Government asked the Independent Pricing and Regulatory Tribunal to review water pricing for data centres, with submissions on draft terms closing 2 October 2026.
• Sydney Water said data centres use under 1% of Greater Sydney demand, about 3.5 billion litres a year.
• Data Centres Australia argued average annual use, not peak-day demand, should drive developer charges.

August 2026 - NEXTDC Reports Higher Water Usage Effectiveness

• NEXTDC reported water usage effectiveness of 2.40 litres per kilowatt-hour for the year to June 2026, up from 2.25.
• Power usage effectiveness rose to 1.49 from 1.44, which it linked to new capacity and meter reconciliation that found leaks.
• Contracted utilisation reached 740.1MW at 30 June 2026, so water efficiency now scales with a much larger load.

July 2026 - NSW Approves Goodman's Project Pluto in Western Sydney

• NSW approved Goodman's AUD 1.11 billion, 68MW Project Pluto at Guildford West, reported in July 2026.
• The design uses water-cooled chillers with open cooling towers, chosen for the lowest projected power usage effectiveness of 1.27 to 1.32.
• A 60,000-litre rainwater tank and water-side economisation cut potable amenity water demand by about 43%.

December 2025 - WSAA Calls for National Data Centre Water Standards

• The Water Services Association of Australia published Data Centres and Water in Australia in December 2025, urging national water-efficiency standards.
• It reported Sydney Water applications of up to 40 million litres a day for a single facility, twenty times the largest drinking water customer.
• It also recommended adding water metrics to NABERS, early utility engagement and recycled water use.

Key Insight

Recent events show approvals, pricing reviews and operator disclosures converging, giving the market firmer evidence on water efficiency and the cost of serving large cooling loads.

Australia Data Center Water Consumption Industry Segmentation

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

Market Breakup by Water Source

• Potable Water
• Recycled Water
• Rainwater and Stormwater Harvesting
• Groundwater and Bore Water
• Others

Potable Water leads because most existing Sydney, Melbourne and Brisbane facilities connect to the drinking network, and data centres take about 0.7% of Sydney supply according to Data Centres Australia. Recycled Water grows fastest at an estimated 15.1% CAGR through 2035, after Greater Western Water agreed in June 2026 to supply Melton recycled water to an Amazon Web Services facility. Rainwater and Stormwater Harvesting is small but rising, as Goodman's Project Pluto includes a 60,000-litre rainwater tank. Groundwater and Bore Water is constrained by licensing, with Water Corporation cutting Gnangara Mound use by 30 billion litres from 2028. Others cover tankered and desalinated supply.

Market Breakup by Cooling Technology

• Evaporative Cooling Towers
• Closed-Loop Liquid Cooling
• Adiabatic and Hybrid Cooling
• Air-Cooled Chillers and Dry Coolers
• Others

Evaporative Cooling Towers lead because they are the cheapest option in Australia's climate, and NSW approved Goodman's open-tower Project Pluto in July 2026. Closed-Loop Liquid Cooling grows fastest at an estimated 13.4% CAGR, as CDC Data Centres announced a Maddington campus in August 2025 designed for zero water consumption in primary cooling. Adiabatic and Hybrid Cooling suits sites with limited non-potable supply, while Air-Cooled Chillers and Dry Coolers avoid on-site water but raise electricity use, as the University of Melbourne noted in July 2026. Others include immersion and direct-to-chip loops with coolant distribution units.

Market Breakup by Data Center Type

• Colocation Data Centers
• Hyperscale Data Centers
• Enterprise and Government Data Centers
• Edge and Regional Data Centers
• Others

Colocation Data Centers lead because operators such as NEXTDC, which reported 740.1MW of contracted utilisation in August 2026, concentrate many tenants on shared cooling plant. Hyperscale Data Centers grow fastest at an estimated 12.6% CAGR, with AirTrunk announcing its AUD 5 billion MEL2 campus in December 2025 and Amazon Web Services securing recycled water in June 2026. Enterprise and Government Data Centers grow slowest as workloads migrate to shared facilities. Edge and Regional Data Centers expand in places such as Toowoomba, where council moved to bar drinking water use in August 2026.

Market Breakup by Region

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

New South Wales dominates, with 19 State Significant Development data centre projects worth AUD 50.3 billion in the pipeline in August 2026, and grows at an estimated 11.0% CAGR as the IPART review raises cost clarity. Western Australia is fastest at an estimated 12.9%, helped by CDC's AUD 415 million Maddington stage and Water Corporation's doubling of the Kwinana recycling plant. Victoria grows at 12.4% on the September 2026 action plan, Queensland at 12.0% as Toowoomba tightens rules, and South Australia at 11.5%. Others, covering Tasmania, the ACT and the Northern Territory, grows at 11.4%, with the ACT drafting a framework for early 2027.

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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 Water Consumption Market

Competition combines Australian colocation specialists, global hyperscale developers and property-led builders. Entry barriers include approvals speed, access to recycled or non-potable supply, power connections and the ability to publish credible water usage effectiveness data to utilities and regulators.

NEXTDC

NEXTDC, headquartered in Brisbane, was founded in 2010 by Bevan Slattery and has been listed on the ASX since December 2010, operating data centres in Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra and Darwin. Its FY26 results on 27 August 2026 showed contracted utilisation of 740.1MW. It reported water usage effectiveness of 2.40 litres per kilowatt-hour for the year to June 2026, up from 2.25, citing new capacity and meter reconciliation.

CDC Data Centres

CDC Data Centres is a Canberra-based operator running four Canberra campuses with eight data centres. In August 2025 it announced a AUD 415 million first stage at Maddington, Western Australia, a campus of up to 200MW with liquid cooling and a closed-loop system described as zero water consumption for primary cooling. In September 2026 it lodged a AUD 200 million Beard 2 application in Canberra with water-efficient closed-loop cooling.

AirTrunk

AirTrunk was founded by Robin Khuda and is owned by Blackstone after its A$24 billion acquisition, building hyperscale campuses across Australia and Asia. In December 2025 it announced more than AUD 5 billion of new investment in MEL2 in Melbourne's north-west, with over 354MW. That lifts its Australian platform to five campuses and over 1.2GW, so its cooling and water sourcing choices carry weight with Melbourne and Sydney utilities.

Goodman Group

Goodman Group, headquartered in Sydney, was founded in 1989, is listed on the ASX as GMG and develops logistics property and data centres. In July 2026 NSW approved its AUD 1.11 billion, 68MW Project Pluto at Guildford West, using water-cooled chillers with open cooling towers. The design adds a 60,000-litre rainwater tank and water-side economisation, which Goodman estimates cut potable amenity water demand by about 43%.

Other players operating in the Australia data center water consumption market include Equinix, Digital Realty, Global Switch, Macquarie Technology Group, and Amazon Web Services, alongside water utilities, cooling equipment suppliers, water treatment contractors and metering providers supporting data centre operators across Australia.

Key Insight

Competition turns on cooling design, water sourcing agreements and approvals speed rather than price, favouring operators that secure recycled supply and publish credible efficiency data.