Response to the NSW Data Centre Consultation Paper

Abstract

This submission positions data centres as foundational infrastructure underpinning AI-driven digital economies, requiring integrated policy approaches across energy systems, water resources, and digital capability. It argues that NSW’s data centre strategy must move beyond enabling investment to actively coordinating infrastructure, markets, and innovation ecosystems to maintain long-term economic competitiveness. Drawing on NZI’s interdisciplinary research, the submission provides recommendations across five core areas: aligning data centre growth with additional renewable energy and system flexibility; establishing comprehensive efficiency and emissions frameworks; ensuring full cost recovery for infrastructure; embedding independent monitoring and transparent data reporting; and adopting performance-based planning that accounts for cumulative and system-level impacts. A central recommendation is the establishment of a formal government–university–industry collaboration to provide independent evidence, standards development, and ongoing policy support, ensuring that regulatory frameworks remain adaptive to rapidly evolving AI and compute demands.