THE PROPERTY DEVELOPMENT REVIEW
blowing that premium real estate in or near the CBD is taken up with data centres. But the location depends on the use case”. “Many of the data centres on city fringes tend to be in industrial hubs, although we haven’t mapped them to land zoning, which would be interesting. “This is a source of tension, as the well-established zoning categories seem to be blurred here. Data centres look like office buildings, but they’re not. They’re essentially industrial facilities. Recognising this should help us set expectations.” UNDERWATER, IN ORBIT, OR IN YOUR NEIGHBOURHOOD At a Committee for Economic Development event in Sydney last month, NSW Environment Protection Authority (EPA) chief executive Tony Chappel told attendees that government was exploring the idea of siting data centre precincts at retiring coal plants. “These old power stations are often really valuable for multiple industrial users,” Chappel said. “They have great connectivity. They have great water. Most people don’t realise that the largest private water holder, I think in Australia, is AGL. “As the cooling water is no longer required because of the coal combustion transitioning out, that all becomes available. So it’s a huge opportunity to get it right. There’s a lot of buffer land around those sites as well, that’s well placed for any multitude of users. And, of course, a very skilled workforce already there.” Other, more adventurous, proposals have also been floated, from under the ocean to orbiting the planet. Microsoft ran a decade-long trial of undersea data centres called Project Natick, before shelving the project in 2024. Google’s Project Suncatcher aims to put data centres into space, one of a number of companies working on the concept. But an “integrated utility precinct” model is a more immediate (and terrestrial) approach to siting data centres, according to TBH Consultancy director Rob Hammond. Standalone facilities will struggle to secure infrastructure, while more sophisticated precincts can tackle problems like heat offtake, scalability and redundancy, and co-ordinated investment. Hammond told The Urban Developer that “the timing is the challenge”. “There’s plenty of capital looking for a home, so money’s less of an object. There’s an opportunity to use the current gold rush in data centres to build enabling infrastructure,” Hammond says. “In terms of an integrated infrastructure precinct at the most basic level, that is talking about a group of hyperscalers clubbing together to build a new water treatment plant, or a new substation, in the area in which they operate. They pay for it, rather than the ratepayers. “That is beneficial both for the hyperscalers, but also for communities in terms of water treatment plants, or in terms of new generation facilities or connections.” While undersea data centres are technically feasible, Microsoft has shelved their development.
Industry and government are working on finding the right incentives for the right models, according to Hammond, with the designs of facilities and planning frameworks still evolving. “That’s where the government policy probably needs to encourage the right behaviours. And if you’ve got the right sort of heat offtake and all those sorts of things set up, then there could be opportunities for you to jump the queue.” Hammond posited the example of co-locating data centres with hospitals, “so you get the benefit of all that bulletproof power infrastructure serving both bits of infrastructure”. “There’s different ways to get better outcomes…We’re not the only ones suggested [integrated utility precincts] are a good idea. It’s definitely got
legs, it’s just early days, at least in Australia.” PRECINCTS ON THE URBAN FRINGE
Odorisio’s project Barossa Green is due to break ground on the first stage within weeks, with expansions planned over coming years. He describes it as “an infrastructure platform, or precinct play, where the data center is the foundation customer”. The project aims to be a net producer of energy and water, with both battery and thermal storage technology. “So we’ve taken an area like the Barossa, which is extremely sensitive—it doesn’t have the water, it doesn’t have the power - and we’re going to bring them in,” Odorisio says. “Which means we expect the infrastructure platform, which is transmission, generation, water production on greenfield land within a community, to be able to deliver those benefits and enable that area to grow. Sovereign energy and water capacity, on a greenfield site outside of (but close to) the urban centre, distinguishes Barossa Green from traditional data centres. Staging the development of Barossa Green allows funders and tenants to watch the model be proven out, according to Odorisio, and respond to changing market demands and data centre technology. Co-location with industrial and agricultural uses provides resilience against any downturn in the AI market. “The chip technology is evolving so quickly that what you will be installing in two to three years time is not what the infrastructure would be designed for today,” Odorisio says. “The next building may reflect higher densities, which would be a smaller building. Or higher thermal requirements, which would be larger thermal stores. We just don’t know what that looks like yet, or what we’re going to be asked for.”
Odorisio says both debt and equity markets are interested in the model, with about 75 per cent of potential funders based overseas. Other projects are in the pipeline across the country. “We’re getting a lot of interest, and people want bigger ones. The next challenge is: can we do this at a large scale, close to the city?” Odorisio said. “Two-hundred acres is expensive, but can you find 1000 acres? We’re going to find out what the answer is over the next year.” Residents and businesses have been supportive of the Barossa Green model, Odorisio says.
Satellite data centres would benefit from cooling and solar energy, but latency in transmitting information may be a challenge.
April / May 2026 – 11
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