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The completed first stage of the West Footscray data centre.Joe Armao<\/p>\nWhen Jacqui Glover moved to West Footscray a decade ago, the street was a quiet patchwork of dusty factories, modest homes and low-slung warehouses. Then the factories and warehouses started moving out, and the data centres started moving in.<\/p>\n
It hasn\u2019t been fun. From her front porch, Glover points to the red-and-black five-storey monolith just metres from her home, which has fundamentally altered the DNA of her street.<\/p>\n
\u201cIt\u2019s at least 11 times that it\u2019s been dug up by different people, different companies,\u201d says Glover with a mix of amusement and horror, gesturing to the scarred footpath across the road.<\/p>\n
The completed first stage of the West Footscray data centre.Joe Armao<\/p>\n
There, high-voltage power lines and data cabling have been laid, ripped up, and laid again to feed the imposing $1.5 billion centre now in operation just metres away. To report this story, this masthead visited the site five times over summer; on four of those visits, the street was being excavated.<\/p>\n
When ASX giant NextDC proposed its West Footscray data centre in 2021, just five people formally objected. The company had bought up almost the entire 10-hectare block, all the way down to the trickle that is Stony Creek, for $47 million. Just one owner held out \u2013 more on that later.<\/p>\n
Now, land that once held warehouses, factories and vacant scrubland where locals sometimes ran horses is under frenzied construction as more than 1000 building workers transform it into a \u201chyperscale\u201d data centre.<\/p>\n
The centre\u2019s first stage \u2013 already one of Melbourne\u2019s biggest \u2013 is up and running. More stages will follow.<\/p>\n
Down the street from Glover, Ryan O\u2019Shaughnessy says his family will soon sell up and move elsewhere in the west. The data centre strongly influenced that decision.<\/p>\n
![\"Ryan](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/6392b96f0614464d1b9c4eb60c69606fc3ea0b02.jpeg\")
Ryan O\u2019Shaughnessy is so sick of living next to a data centre his family will soon sell up.Justin McManus<\/p>\n
Beyond the construction issues that have years to run, he questions the ethics of using inner-city land for a data centre when the city is screaming for housing.<\/p>\n
\u201cNot to mention the environmental impact,\u201d he says. \u201cI just don\u2019t want to look at it any more.\u201d<\/p>\n
This is life on the feverish frontline of Australia\u2019s data-centre boom. The excavators Glover and O\u2019Shaughnessy watch from their porches are a physical manifestation of a global gold rush \u2013 one that will see hyperscale developers spend $US700 billion ($984 billion) to build data centres in 2026.<\/p>\n
These centres are \u201cthe cloud\u201d: the enormous industrial warehouses of servers, and kilometres of cabling, that process our digital lives.<\/p>\n
Billions were pouring into data centre construction in Australia before 2022, driven by our hunger for computing power as everything from banking to shopping to insurance and our photos went online.<\/p>\n
Then, OpenAI launched ChatGPT and the planet went into digital overdrive.<\/p>\n
Artificial intelligence uses immense energy and computing power to train massive models and generate lightning-fast responses. To meet that demand, Australia has rapidly become the Asia-Pacific\u2019s third-largest data centre market, behind only China and India. Valued at $30 billion, 80 per cent of the local sector is controlled by a small club of heavyweights: AirTrunk, Amazon Web Services, CDC, Microsoft and NextDC.<\/p>\n<\/p>\n
Victoria\u2019s government is rolling out the red carpet to data-centre developers, desperate to poach this lucrative investment from rival states like New South Wales.<\/p>\n
But as the digital economy expands, its massive physical footprint is crashing into suburban realities, sparking serious environmental and infrastructure concerns. The central tension is simple: we all want the speed of AI, but no one wants the energy vampire living next door.<\/p>\n
On a podcast last July<\/a>, OpenAI chief Sam Altman said an unfortunate side effect of our swift uptake of ChatGPT, Gemini and Claude might be that \u201ca lot of the world gets covered in data centres\u201d. In West Footscray, a suburb once defined by its distance from the digital elite, that prediction has arrived.<\/p>\n In December, The Age toured the first stage of the West Footscray facility, a sprawling 41,000 square metres of \u201ctechnical space\u201d wrapped in NextDC\u2019s signature black-and-red branding \u2013 a hallmark of its 17 operational centres across the country.<\/p>\n Getting beyond the centre\u2019s front desk is not easy \u2013 defence-grade security measures protect sensitive areas with biometric scanning that checks for a pulse and body temperature, while extensive surveillance and strict escort protocols provide an extra layer. Our tour guide emphasises this intense physical scrutiny is a primary selling point for corporate clients demanding guaranteed data protection.<\/p>\n<\/p>\n Inside the enormous bunker, data halls are filled with servers configured in \u201chot aisle\/cold aisle\u201d rows to cool specific zones rather than the entire cavernous space.<\/p>\n Even so, the environment is intense: the racks radiate heat, and the roar of the cooling systems is relentless. While some areas use standard layouts, businesses like banks and retailers demand extra physical barriers, locking their servers behind wire cages and blackout covers to meet Australia\u2019s strict financial regulations.<\/p>\n Notably, very few staff are present, highlighting a key concern from critics about the benefits of data centres once the initial construction jobs dry up.<\/p>\n The facility sits in West Footscray simply because the infrastructure is there: new high-voltage power lines and heavy water pipelines run through the area.<\/p>\n It\u2019s such a lucrative drawcard that, last year, the state government approved a rival developer\u2019s $82 million data centre \u2013 on the same street, just a few doors from Glover and O\u2019Shaughnessy\u2019s homes.<\/p>\n The Promoter-in-Chief<\/p>\n Danny Pearson, Victoria\u2019s Minister for Economic Growth and Jobs, has aggressively courted data centre operators.<\/p>\n In 2025, his diary shows he met key players \u2013 including NextDC, AirTrunk, Microsoft and Amazon \u2013 16 times. Pearson was unrepentant on Monday after The Age revealed a NextDC data centre<\/a> costing almost $1 billion in Port Melbourne was approved in 75 days.<\/p>\n Pearson said 75 days was \u201cabsolutely\u201d appropriate for a project like it and pointed to the state\u2019s \u201csustainable data centre action plan\u201d that considers energy and water use. Pearson\u2019s focus, though, appeared squarely on beating NSW to data centre investment.<\/p>\n Related Article \u201cWe are in a race. We don\u2019t want to have a situation where billions of dollars go into NSW and Victorian workers miss out [on] these factories of the 21st century,\u201d he said.<\/p>\n Pearson argues data centres \u2013 often built on Melbourne\u2019s cheaper ex-manufacturing land near the city centre \u2013 can also be used \u201cto fast-track decarbonisation of the Victorian economy\u201d as new projects sign long-term agreements with generators to buy renewable energy at a fixed price.<\/p>\n These agreements, though, are not mandated and critics argue Pearson and Premier Jacinta Allan prioritise construction jobs over protecting the environment, grid stability and local amenity.<\/p>\n The industry is certainly grateful for the backing. AirTrunk\u2019s chief financial officer has praised the state\u2019s assistance<\/a> as \u201cintegral\u201d to its success.<\/p>\n Victorian Greens leader Ellen Sandell says Labor is not considering the legacy questions.<\/p>\n \u201cFast-tracking dozens of data centres is a climate and environment disaster. They guzzle power and water like no tomorrow, and Labor is being reckless rushing them into Victoria when we\u2019re heading into a drought and don\u2019t have enough renewable energy to power our own homes.\u201d<\/p>\n The Australian Energy Market Operator manages Australia\u2019s power grid. In August 2025<\/a>, it found data centres consumed about 2 per cent of national power \u2013 but that this could rise to 9 per cent by 2035. Water demands are harder to quantify, but even the industry concedes the sector will soon consume 1 per cent of Melbourne\u2019s supply, and 2 per cent of Sydney\u2019s.<\/p>\n Sandell also points out the data centres create few jobs. \u201cLabor shouldn\u2019t be giving tech billionaires free rein over our water and energy for data centres without any benefits flowing back to Victorians.\u201d<\/p>\n The Phantom Load<\/p>\n Spearheading the industry\u2019s campaign to reshape energy, planning and copyright laws is Data Centres Australia, a coalition formed last year comprisng Microsoft, Amazon, TikTok, AirTrunk and others.<\/p>\n Chief executive Belinda Dennett, who co-founded the group, was a senior adviser to former federal Labor minister Stephen Conroy during the rollout of the NBN, then moved to Microsoft for a decade, and then to AirTrunk.<\/p>\n The sector has growing ties to Labor, with tech firms having recruited heavily from the party\u2019s ranks. TikTok employs Sabina Husic<\/a>, a former senior adviser to Anthony Albanese and Daniel Andrews, while players in Victoria include veteran Labor lobbyist Phil Reed at ESR and ALP member and former adviser Ken McAlpine at Amazon Web Services.<\/p>\n Dennett rejects the \u201cenergy vampire\u201d label, arguing data centres are far more efficient than office-based servers that she says use 67 per cent more energy. And she says the public discourse around these centres is being warped by scary but ultimately misleading numbers.<\/p>\n Energy consumption forecasts cited by critics are often inflated by speculative applications that won\u2019t be built \u2013 a \u201cphantom demand\u201d, as researchers Oxford Economics put it.<\/p>\n Dennett says only one in seven data centre applications for electricity use actually comes online \u2013 meaning energy figures are \u201cinflated by poor forecasting methodology that relies on applications for connection\u201d.<\/p>\n Grattan Institute energy fellow Tony Wood agrees that power fears around data centres are often overstated because many proposed projects never eventuate. \u201cWhat\u2019s the saying \u2013 there\u2019s many a slip between cup and sip. There\u2019s going to be a material impact on the grid that we\u2019re going to have to manage. But you\u2019ve got to be cautious about how much of a drain on the network that will, in fact, be.\u201d<\/p>\n Water is another flashpoint. The processing units that provide the immense computing power that occurs inside data centres run very hot \u2013 some data centres rely on evaporative cooling, consuming millions of litres of water on hot days. The industry, aware of growing concern over water use, is moving towards closed-loop cooling that uses far less liquid.<\/p>\n Last year, Sydney\u2019s annual water pricing ruling<\/a> warned that, by 2035, cooling data centres could consume a quarter of the city\u2019s drinking water. Dennett dismisses the projection as based on \u201cflawed methodology<\/a>\u201d, explaining that utilities ask operators to submit their \u201cpeak flow\u201d requirements. This is the maximum water needed on a 45-degree day rather than the average reality. \u201cThe actual water use by data centres is quite modest. But it\u2019s a very emotional issue.\u201d<\/p>\n<\/p>\n Still, the local energy demands are staggering. In Gippsland, a proposed $10 billion data centre near the former Hazelwood power station would consume as much as 720 megawatts<\/a> of power at its peak \u2013 half the capacity of the old coal plant itself.<\/p>\n Dennett is keen to distance Australia\u2019s tight regulatory processes from the \u201cchaotic free-for-all\u201d seen in the United States\u2019 data-centre boom. She thinks that boom is driving a lot of the anxiety here. In the US, electricity bills<\/a> have spiked by more than 200 per cent in data-centre hotspots and residents near data centres complain of their impact on water supply<\/a> and constant noise<\/a>.<\/p>\n President Donald Trump said last week that Americans were so concerned about data centres driving up electricity bills that major tech companies \u201chave the obligation to provide for their own power needs. They can build their own power plants\u201d.<\/p>\n The crisis is so acute in the US that Microsoft, desperate for power, has even signed a deal to reopen a nuclear reactor at Three Mile Island in Pennsylvania (site of the 1979 partial meltdown) solely to service its AI needs.<\/p>\n Dennett says any comparison to America is meaningless: \u201cThe US has 5400 data centres with 54 gigawatts of capacity. Australia has roughly 250 centres with 1.4 gigawatts.\u201d<\/p>\n Energy hysteria<\/p>\n Greg Boorer, founder of the $14 billion CDC Data Centres, is driving a massive expansion in Melbourne\u2019s west, including a newly opened Brooklyn campus and another in Laverton.<\/p>\n The chief executive praises the Victorian government\u2019s role in attracting data-centre investment, saying its development facilitation program<\/a> \u2013 which fast-tracks projects through the planning minister, bypassing councils and preventing appeals \u2013 gives \u201cplanning certainty\u201d.<\/p>\n He pushes back against energy \u201chysteria\u201d on data centres, noting the sector consumes just 2 per cent of the national grid: the same as shopping centres, and a fraction of the mining sector\u2019s 16 per cent. \u201cWe are nowhere near the big bad wolf that some people make us out to be.\u201d<\/p>\n Yet financial analysts are ringing alarm bells. A recent Moody\u2019s Ratings report warns meeting data-centre power demand will cost $15 billion this decade, creating \u201csocial risks\u201d as the industry competes for resources. Water is cited as a specific vulnerability in the planet\u2019s \u201cdriest inhabited continent\u201d.<\/p>\n<\/p>\n University of Technology Sydney researcher Bronwyn Cumbo says if Victoria wants to avoid a backlash, locals must retain a say in projects near them \u2013 precisely what the Victorian government is removing in the name of certainty and speed. \u201cWe have this sense of urgency like we\u2019re going to miss the boat. We want to think critically about who is benefitting from this process, who are the key voices leading [the debate] and how is it going to be impacting others.\u201d<\/p>\n RMIT thermal expert professor Gary Rosengarten is sceptical of the industry\u2019s green promises to run their facilities on 100 per cent renewable energy.<\/p>\n \u201cI\u2019d love it to be net zero, but boy, there\u2019s going to be a need for extra renewable energy,\u201d he says.<\/p>\n Without a massive surplus of renewables \u2013 something Australia doesn\u2019t possess \u2013 every megawatt of green energy going to a data centre doesn\u2019t power a home or hospital, forcing the grid to rely on coal and gas for longer.<\/p>\n And Rosengarten points out that while new technologies in use like closed-loop liquid cooling systems reduce water usage, they come with a trade-off: they require more electricity to cool them.<\/p>\n In the thermodynamics of data centres, there\u2019s no free lunch.<\/p>\n The Storage Box Economy<\/p>\n Beyond the environmental questions, RMIT economic geographer Todd Denham queries their local contribution, arguing data centres are essentially low-employment \u201cstorage facilities\u201d that crowd out industries that could one day provide denser employment on prime land.<\/p>\n Grattan Institute\u2019s Tony Wood, too, is less concerned about data centres\u2019 energy drain than their lack of local value. \u201cThere\u2019s a question on whether these data centres will create economic benefit for Australia \u2013 they don\u2019t create many jobs.\u201d<\/p>\n Planning documents show NextDC\u2019s $1 billion Port Melbourne data centre will have just 180 staff and visitors, while its vast West Footscray centre has just 74 vehicle spaces. The yet-to-be-built West Footscray data centre by developer Perri Projects in the same street as NextDC\u2019s might have 29,000 square metres of floor space \u2013 but a council report notes it will have \u201cmaximum staffing of 40 people\u201d.<\/p>\n The industry counters that these projects revitalise dormant land, pointing to sites like CDC\u2019s high-tech Brooklyn centre; it sits on land used for decades to store cars, and before that as an abattoir.<\/p>\n<\/p>\n![\"Premier](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/1772323091_886_d7b35dea0352d78a6efc174b505b64f4f176e76d.jpeg\")
Premier Jacinta Allan with NextDC chief executive Craig Scroggie in one of the data centre\u2019s Melbourne premises. Economic Growth and Jobs Minister Danny Pearson is directly behind them.Justin McManus<\/p>\n![\"Premier](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/d7b35dea0352d78a6efc174b505b64f4f176e76d.jpeg\")
<\/a><\/p>\n![\"Data](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/5053208c2c61e92ac644cab88b7bf9909bde5f48.jpeg\")
Data Centres Australia chief executive Belinda Dennett inside NextDC\u2019s West Footscray facility.Eddie Jim<\/p>\n
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Thanh Thai in his metalworks business, as cranes work away on building the NextDC data centre in West Footscray.Joe Armao<\/p>\n![\"As](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/02\/2b5516ccef5e126fe0abe4c38e21894efa02ce4b.jpeg\")
As the data centre comes out of the ground, Thanh Thai\u2019s family business (in the left of this shot) is the only holdout on the West Footscray block.Joe Armao<\/p>\n