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Hyperscale data centres and how they threaten our rivers
Victoria has acknowledged that many of our rivers are already severely flow-stressed and has committed to return environmental water to the Moorabool, Barwon, Werribee, Maribyrnong, Yarra Birrarung, Thomson, Latrobe and other rivers across southern Victoria.
At the same time, a new generation of hyperscale data centres is emerging with the potential to consume gigalitres of water each year.
19.7GL proposed data centre water requirements in Greater Western Water Area
Propsed yearly consumption for a single data centre
%
Equivilent to draining 3/4s of the West Barwon Reservoir pictured above each year
The Problem
What has changed
Hyperscale data centres are fundamentally different from traditional data centres. They can operate at hundreds of megawatts, require continuous cooling and consume water at gigalitre scale.
Proposals within Greater Western Water’s service area have indicated potential combined demand of approximately 19.7 GL a year, roughly the capacity of the West Barwon Reservoir supplying Geelong.
Proposals elsewhere in Australia have identified possible demand of up to 14 GL a year for individual data centres.
The large West Barwon Reservoir reaching deep into the Otway Ranges supplies the city of Geelong. A single hyperscale data centre is capable of draining the equivilent of 3/4s of this reservoir every year.
The river-recovery risk
This demand is emerging after Victoria has unequivocally acknowledged that many of its rivers are already highly flow-stressed.
Many government environmental water commitments under the Central and Gippsland Region Sustainable Water Strategy remain outstanding.
A relatively small number of hyperscale facilities are capable of consuming volumes comparable to the water promised for vital river restoration across southern Victoria.
This compounds the risks that these recovery amounts will be further delayed or cancelled entirely.
| Commitment | Volume / timing |
|---|---|
| Moorabool River West Branch | 6.5 GL by 2032 |
| Moorabool River East Branch | 0.7 GL by 2032 |
| Barwon River | 5 GL by 2032 |
| Werribee River (short term) | 2 GL by 2024 |
| Werribee River | 10 GL by 2032 |
| Maribyrnong River | 7 GL by 2032 |
| Yarra River | 11 GL by 2032 |
| Bunyip & Tarago Rivers | 13 GL by 2032 |
| Thomson River | 15 GL by 2032 |
| Macalister River (short term) | 1.7 GL by 2026 |
| Macalister River | 10.9 GL by 2032 |
| Latrobe River (short term) | 7.3 GL by 2027 |
| Latrobe River | 7.7 GL by 2029 |
| Tyers River | 13 GL by 2027 |
The price and cost of living risk
If left unregulated additional hyperscale demand will bring forward greater and more frequent use of the Victorian Desalination Plant and other expensive supply augmentations.
Unless pricing arrangements change, these additional costs will be recovered from residents.
Result: households and other businesses will subsidise water-intensive data centre cooling.
Protecting households
Where data centres bring forward desalination, recycled-water infrastructure or network expansion, data centres should pay those additional costs not households. This means not just covering connection and infrastructure costs but the cost of more expensive sources of water.
Stop wasting drinking water
New hyperscale data centres should be designed around closed-loop cooling, recycled water and other fit-for-purpose non-drinking water sources, backed by binding efficiency standards and public disclosure.
Five practical actions
CWA is asking candidates and political parties across Victoria to commit to:
- Delivering promised environmental flows first including the water-recovery commitments in the Central and Gippsland Region Sustainable Water Strategy.
- Making non-drinking water the rule requiring closed-loop, recycled or other fit-for-purpose non-potable water for new hyperscale data centres, with drinking water limited to genuine emergency or backup use.
- Protecting household water bills ensuring the additional costs created by data-centre demand are identified and recovered from those creating them.
- Introducing a data-centre-specific water tariff reflecting the full cost of desalination, recycled water, infrastructure, drought security and environmental impacts.
- Requiring binding standards and transparency including publicly available Water Impact Assessments, facility-level water-use disclosure, enforceable efficiency standards and assessment of cumulative regional demand.
Question for parties and candidates
The Concerned Waterways Alliance is non-partisan. We believe these questions should be put to candidates and parties across the political spectrum and encourage communities to ask the same questions locally.
Will you support the return of water already promised to Victoria’s rivers, protect households from the additional water costs created by hyperscale data centres, and require the industry to operate within sustainable water limits?
Will you require all new hyperscale data centres to use closed-loop cooling, recycled water or another fit-for-purpose non-potable source, with drinking water permitted only for limited emergency or backup supply?
Will you support a dedicated data-centre water tariff that recovers the full marginal cost of desalination, recycled-water infrastructure, network augmentation and environmental impacts of hyperscale data centres, rather than passing those costs to households?
Will you guarantee that households will not pay higher water bills because data centre consumption brings forward desalination, recycled-water infrastructure or network expansion?
Will you legislate for mandatory facility-level water disclosure, enforceable efficiency standards and cumulative regional limits for data centres?
Rivers should not have to wait longer, and households should not have to pay more, so that drinking water can remain a cheap cooling option for hyperscale data centres.
Return promised environmental flows. Protect household bills. Make data centres pay their full water costs.
Friends of the Barwon Webinar titled Impacts of Hyperscale Data Centres on Victoria's Water Resources featuring two CWA members
CWA Submissions and Reports on Data Centres and Water
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CWA submission to Senate inquiry into Artificial Intelligence and Data Centres
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From Expectations to Outcomes: Why voluntary guidance on data centres will not protect Victoria’s water
The Australian Government has this week released its Expectations of Data Centres and AI Infrastructure Developers, alongside the earlier National AI Plan. At first glance, this is a welcome development. It signals that government is beginning to recognise that...
Hyperscale Data Centres and Victoria’s Water: CWA Position paper
The Concerned Waterways Alliance (CWA) has released its February 2026 position paper, Hyperscale Data Centres and Victoria’s Water: Protecting a Public Resource for Communities and Rivers The paper examines a rapidly emerging issue: the scale of water being sought by...
Data Centres and Drinking Water: Why the Victorian Government Must Act Now
On the forested slopes of the Otway Ranges lies the West Barwon Reservoir, a source of high-quality drinking water for Geelong and surrounding communities. But the volume of this vital resource is now symbolic of a wider issue: the quiet but massive diversion of...
Hyperscale Data Centres and Victoria’s Water: CWA Position paper
The Concerned Waterways Alliance (CWA) has released its February 2026 position paper, Hyperscale Data Centres and Victoria’s Water: Protecting a Public Resource for Communities and Rivers
The paper examines a rapidly emerging issue: the scale of water being sought by hyperscale data centres in a drying, flow-stressed state. It builds on our earlier post in July on the issue.
CWA is not opposed to data centres or AI
CWA is not opposed to data centres or artificial intelligence as such. Digital infrastructure is an important part of a modern economy and society, and CWA itself makes use of digital and AI tools in its research, communications and advocacy.
Our concern is not whether data centres should exist, but how they are developed, where their water comes from, who bears the costs of supplying that water, and whether their growth is compatible with the commitments already made to restore Victoria’s stressed rivers and waterways.
Data centres should be able to grow without shifting their water and infrastructure costs onto households, competing with environmental water recovery, or creating avoidable demand for high-quality drinking water. The rapid expansion of hyperscale facilities makes it particularly important that new developments adopt water-efficient cooling technologies, use recycled or other fit-for-purpose non-drinking water wherever practicable, disclose their water requirements transparently, and pay the full costs associated with the additional demand they create.
CWA therefore supports responsible data-centre development within clear and enforceable water limits. Innovation in AI and digital infrastructure should proceed alongside rather than at the expense of water security, healthy rivers and affordable water for communities.
Get in touch with your local Alliance group
"Let our rivers be rivers, connected from source to sea, and flourishing in the face of climate change"
The Concerned Waterways Alliance acknowledges that the lands and waterways of southern Victoria are the unceded territories of Easter Marr, Wadawurrung, Wurundjeri, Gunaikurnai and Bunurong peoples. We pay our respect to their Ancestors, who cared for Country since time began, and to all Traditional Owners who continue to speak and care for their Country.