Artificial intelligence hubs are expanding so rapidly they could consume almost one third of a state's electricity by 2040, in addition to straining water supplies.
But Australia could address their potential environmental risks by introducing a data centre regulator, a committee has heard, and enforcing strict requirements for renewable energy generation.
Electricity, climate and business groups issued the advice at the NSW government's data centre inquiry on Friday, which also heard Australia still had an opportunity to prevent the bad outcomes seen in some US states.
The government launched its inquiry in January to investigate whether NSW is prepared to handle the environmental and economic demands of data centres that have boomed following the rise of AI tools.
Their rapid growth in Australia had become a once-in-a-generation challenge, Ausgrid customer group executive Fatima Bazzi said, as tech companies inundated the energy distributor with applications.
