Data centre industry butts up against community challenges

The industry body for data centre proponents says its members are battling community hesitancy and policy uncertainty.

It comes amid calls by minor parties for SA to halt approvals for new centres.

The state government is preparing legislation to regulate the industry.

The peak body representing data centres in Australia say its members are still grappling with "getting community consultation right" after several AI companies have either dumped or paused their plans for building centres across the country.

South Australia has today seen the first sign of data centre development in retreat, with Quantum DC announcing it will pause plans to build a 1200-megawatt AI data centre in Tungkillo, in the Adelaide Hills, following deep frustration, anger and protests from the surrounding community.

In New South Wales, another AI data centre proposed for Sydney's south, on the Cooks River, was scrapped over the weekend, the latest in a series of proposed NSW data centres to be dumped following community opposition.

Peak body Data Centres Australia does not represent Quantum DC.

Speaking broadly, its CEO Belinda Dennett said the challenge with community engagement was choosing the right time.

"Communities want early engagement, but they also want detailed answers, so there is a bit of a trade-off.

"Often, early engagement means you don't have all those answers around design plans, around energy source, around how much water that may use."

She said there was great potential and interest to build data centres in South Australia, but operators and investors wanted policy certainty.

"That's the challenge for all the states at the moment, the challenge of not having federal rules in place … we don't have that policy certainty," she said.

"The quicker we have certainty, the more viable I think Australia's going to be."

On Thursday, political parties including the Liberals, One Nation and the Greens welcomed the pause on the Tungkillo development, while the SA government criticised the developer for its consultation process.

The Greens went a step further, calling for a data centre moratorium.

SA's minister for artificial intelligence (AI), Chris Picton, said the Tungkillo announcement highlighted why the state government was keen to get legislation through the parliament to enable proper regulatory control.

"[It's] going to be critical to making sure that we can think through all these issues with data centres to make sure that can be managed in an appropriate way, whether that be issues about energy, or water, or land use," Mr Picton said.

Opposition leader Ashton Hurn said it didn't make sense for a data centre at Tungkillo to be built on "prime agricultural land", but there was also a need to make sure the community understood why data centres are needed.

"We believe that a vehicle to do that is including them in the royal commission," Ms Hurn said.

When details of the state's Royal Commission into Artificial Intelligence were released in early October, its terms of reference did not include data centres.

Mr Picton said it wasn't remiss of the government not to include them: "They are completely separate things.

"Data centres have issues, but they're infrastructure issues … They're issues about energy use, water use and where the land is."

The Greens, One Nation and the Liberal Party united in the upper house on Wednesday to establish a parliamentary inquiry into data centres, which was not supported by Labor.

One Nation SA leader Cory Bernardi said the party would like to see a pause on data centres until the inquiry is finished.

"But we're also recognising that data centres per se are not bad," he said.

"We have a data centre here in the metropolitan area of Adelaide that hasn't caused any fuss at all.

"But what we want is a community licence for it."