AdvertisementSaveYou have reached your maximum number of saved items.Remove items from your saved list to add more.ShareAAAWhen 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.It hasn’t 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.“It’s at least 11 times that it’s been dug up by different people, different companies,” says Glover with a mix of amusement and horror, gesturing to the scarred footpath across the road.The completed first stage of the West Footscray data centre.Joe ArmaoThere, 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.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 – more on that later.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 “hyperscale” data centre.AdvertisementThe centre’s first stage – already one of Melbourne’s biggest – is up and running. More stages will follow.Down the street from Glover, Ryan O’Shaughnessy says his family will soon sell up and move elsewhere in the west. The data centre strongly influenced that decision.Ryan O’Shaughnessy is so sick of living next to a data centre his family will soon sell up.Justin McManusBeyond 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.“Not to mention the environmental impact,” he says. “I just don’t want to look at it any more.”This is life on the feverish frontline of Australia’s data-centre boom. The excavators Glover and O’Shaughnessy watch from their porches are a physical manifestation of a global gold rush – one that will see hyperscale developers spend $US700 billion ($984 billion) to build data centres in 2026.AdvertisementThese centres are “the cloud”: the enormous industrial warehouses of servers, and kilometres of cabling, that process our digital lives.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.Then, OpenAI launched ChatGPT and the planet went into digital overdrive.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’s 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.Victoria’s government is rolling out the red carpet to data-centre developers, desperate to poach this lucrative investment from rival states like New South Wales.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.AdvertisementOn a podcast last July, OpenAI chief Sam Altman said an unfortunate side effect of our swift uptake of ChatGPT, Gemini and Claude might be that “a lot of the world gets covered in data centres”. In West Footscray, a suburb once defined by its distance from the digital elite, that prediction has arrived.In December, The Age toured the first stage of the West Footscray facility, a sprawling 41,000 square metres of “technical space” wrapped in NextDC’s signature black-and-red branding – a hallmark of its 17 operational centres across the country.Getting beyond the centre’s front desk is not easy – 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.Inside the enormous bunker, data halls are filled with servers configured in “hot aisle/cold aisle” rows to cool specific zones rather than the entire cavernous space.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’s strict financial regulations.AdvertisementNotably, very few staff are present, highlighting a key concern from critics about the benefits of data centres once the initial construction jobs dry up.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. It’s such a lucrative drawcard that, last year, the state government approved a rival developer’s $82 million data centre – on the same street, just a few doors from Glover and O’Shaughnessy’s homes.The Promoter-in-ChiefDanny Pearson, Victoria’s Minister for Economic Growth and Jobs, has aggressively courted data centre operators. In 2025, his diary shows he met key players – including NextDC, AirTrunk, Microsoft and Amazon – 16 times. Pearson was unrepentant on Monday after The Age revealed a NextDC data centre costing almost $1 billion in Port Melbourne was approved in 75 days.Premier Jacinta Allan with NextDC chief executive Craig Scroggie in one of the data centre’s Melbourne premises. Economic Growth and Jobs Minister Danny Pearson is directly behind them.Justin McManusPearson said 75 days was “absolutely” appropriate for a project like it and pointed to the state’s “sustainable data centre action plan” that considers energy and water use. Pearson’s focus, though, appeared squarely on beating NSW to data centre investment.“We are in a race. We don’t want to have a situation where billions of dollars go into NSW and Victorian workers miss out [on] these factories of the 21st century,” he said.AdvertisementPearson argues data centres – often built on Melbourne’s cheaper ex-manufacturing land near the city centre – can also be used “to fast-track decarbonisation of the Victorian economy” as new projects sign long-term agreements with generators to buy renewable energy at a fixed price.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.The industry is certainly grateful for the backing. AirTrunk’s chief financial officer has praised the state’s assistance as “integral” to its success.Victorian Greens leader Ellen Sandell says Labor is not considering the legacy questions.“Fast-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’re heading into a drought and don’t have enough renewable energy to power our own homes.”The Australian Energy Market Operator manages Australia’s power grid. In August 2025, it found data centres consumed about 2 per cent of national power – 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’s supply, and 2 per cent of Sydney’s.Sandell also points out the data centres create few jobs. “Labor shouldn’t be giving tech billionaires free rein over our water and energy for data centres without any benefits flowing back to Victorians.”The Phantom LoadSpearheading the industry’s campaign to reshape energy, planning and copyright laws is Data Centres Australia, a coalition formed last year comprisng Microsoft, Amazon, TikTok, AirTrunk and others.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.Data Centres Australia chief executive Belinda Dennett inside NextDC’s West Footscray facility.Eddie JimThe sector has growing ties to Labor, with tech firms having recruited heavily from the party’s ranks. TikTok employs Sabina Husic, 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, who lobbies for Amazon Web Services.Dennett rejects the “energy vampire” 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.Energy consumption forecasts cited by critics are often inflated by speculative applications that won’t be built – a “phantom demand”, as researchers Oxford Economics put it.Dennett says only one in seven data centre applications for electricity use actually comes online – meaning energy figures are “inflated by poor forecasting methodology that relies on applications for connection”.Grattan Institute energy fellow Tony Wood agrees that power fears around data centres are often overstated because many proposed projects never eventuate. “What’s the saying – there’s many a slip between cup and sip. There’s going to be a material impact on the grid that we’re going to have to manage. But you’ve got to be cautious about how much of a drain on the network that will, in fact, be.”Water is another flashpoint. The processing units that provide the immense computing power that occurs inside data centres run very hot – 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.Last year, Sydney’s annual water pricing ruling warned that, by 2035, cooling data centres could consume a quarter of the city’s drinking water. Dennett dismisses the projection as based on “flawed methodology”, explaining that utilities ask operators to submit their “peak flow” requirements. This is the maximum water needed on a 45-degree day rather than the average reality. “The actual water use by data centres is quite modest. But it’s a very emotional issue.”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 of power at its peak – half the capacity of the old coal plant itself.Dennett is keen to distance Australia’s tight regulatory processes from the “chaotic free-for-all” seen in the United States’ data-centre boom. She thinks that boom is driving a lot of the anxiety here. In the US, electricity bills have spiked by more than 200 per cent in data-centre hotspots and residents near data centres complain of their impact on water supply and constant noise.President Donald Trump said last week that Americans were so concerned about data centres driving up electricity bills that major tech companies “have the obligation to provide for their own power needs. They can build their own power plants”.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.Dennett says any comparison to America is meaningless: “The US has 5400 data centres with 54 gigawatts of capacity. Australia has roughly 250 centres with 1.4 gigawatts.”Energy hysteriaGreg Boorer, founder of the $14 billion CDC Data Centres, is driving a massive expansion in Melbourne’s west, including a newly opened Brooklyn campus and another in Laverton.The chief executive praises the Victorian government’s role in attracting data-centre investment, saying its development facilitation program – which fast-tracks projects through the planning minister, bypassing councils and preventing appeals – gives “planning certainty”.He pushes back against energy “hysteria” 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’s 16 per cent. “We are nowhere near the big bad wolf that some people make us out to be.”Yet financial analysts are ringing alarm bells. A recent Moody’s Ratings report warns meeting data-centre power demand will cost $15 billion this decade, creating “social risks” as the industry competes for resources. Water is cited as a specific vulnerability in the planet’s “driest inhabited continent”.University of Technology Sydney researcher Bronwyn Cumbo says if Victoria wants to avoid a backlash, locals must retain a say in projects near them – precisely what the Victorian government is removing in the name of certainty and speed. “We have this sense of urgency like we’re 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.”RMIT thermal expert professor Gary Rosengarten is sceptical of the industry’s green promises to run their facilities on 100 per cent renewable energy.“I’d love it to be net zero, but boy, there’s going to be a need for extra renewable energy,” he says.Without a massive surplus of renewables – something Australia doesn’t possess – every megawatt of green energy going to a data centre doesn’t power a home or hospital, forcing the grid to rely on coal and gas for longer.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.In the thermodynamics of data centres, there’s no free lunch.The Storage Box EconomyBeyond the environmental questions, RMIT economic geographer Todd Denham queries their local contribution, arguing data centres are essentially low-employment “storage facilities” that crowd out industries that could one day provide denser employment on prime land.Grattan Institute’s Tony Wood, too, is less concerned about data centres’ energy drain than their lack of local value. “There’s a question on whether these data centres will create economic benefit for Australia – they don’t create many jobs.”Planning documents show NextDC’s $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’s might have 29,000 square metres of floor space – but a council report notes it will have “maximum staffing of 40 people”.The industry counters that these projects revitalise dormant land, pointing to sites like CDC’s high-tech Brooklyn centre; it sits on land used for decades to store cars, and before that as an abattoir.Or take NextDC’s Port Melbourne project, which is symbolically rising on the abandoned site of former newspaper printing presses.CDC’s Greg Boorer challenges the notion the sector doesn’t create ongoing jobs, describing data centres as the “power plants or ports” of the digital age, enabling modern, high-skilled employment. “The reality is all the modern jobs of this and decades to come are underpinned by the services that are rendered out of facilities like the ones that we have.”Premier Jacinta Allan, too, hawkishly heralds the job prospects from data centres, saying in November that Victoria would become “the national leader in data-centre investment, unlocking projects … worth up to $25 billion in potential capital expenditure”. She left largely unanswered the question of how data centres created significant ongoing jobs.Ewan Rankin, economist at e61, says the broader economic benefits to Victoria are largely speculative. “Really in the short term, we’re just talking about construction jobs,” he says. Beyond short-term construction booms, he says, the highly capital-intensive facilities are “not going to be a game-changer for employment”.The HoldoutsAmid the NextDC expansion in West Footscray sits a solitary remnant of the old economy: Thanh Thai’s family engineering business, which has been on this block since 1980. Thirteen years ago, the family also opened a popular local gardening business, Paramount Pots.Thanh Thai in his metalworks business, as cranes work away on building the NextDC data centre in West Footscray.Joe ArmaoThe site continues to produce industrial magnets for mining. It appears semi-dormant but kicks into life when a contract comes in. Thai is the one remaining landowner declining to sell to NextDC; his workshop’s large overhead cranes are prohibitively expensive to replicate on a different site. “With the cost of moving, it is impossible,” he says.For residents living on the residential boundary of the site, high-level debates about economic transition and grid stability are academic. Their reality is noise, dust, light, fights over parking with construction workers and, when building takes a break, a low-level hum from the data centre.Fadh Yusof is a pediatric doctor who does shift work. With his home opposite the data centre’s second stage, the project has been difficult.He installed heavy block-out curtains to deal with high-intensity security and crane lighting flooding his home at night. He has pleaded with the builder for a reprieve from frequent seven-day work weeks that leave him with no quiet time to recover. “Can’t we get one day off?”As the data centre comes out of the ground, Thanh Thai’s family business (in the left of this shot) is the only holdout on the West Footscray block.Joe ArmaoAsked to respond to a series of questions on construction and operation of the data centre, a NextDC spokeswoman declined to respond.With more stages planned for the 10-hectare site, the residents know the digging will continue, the cranes will keep moving and the dust will keep settling for years to come.“It’s just a constant battle,” says Jacqui Glover, looking at the high-voltage lines that feed the growing factory for data across the road.Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.