A $10 billion data center is set to be built in Hazelwood, Victoria's Latrobe Valley, marking a significant development in Australia's AI infrastructure. This project, led by Singaporean asset manager Keppel Ltd, will span 123 hectares near Morwell, offering a strategic location for the data center industry. With a 720-megawatt capacity, it will be one of the largest in the country, catering to the growing demand for data centers globally. The site's proximity to a major electricity node and its location within the Gippsland Renewable Energy Zone provide a unique advantage, ensuring the necessary resources for efficient operation.
The data center industry is experiencing rapid growth, with an estimated 4,000 centers worldwide, and Australia is a top-five destination. The global market is projected to surge from $269 billion in 2025 to $584 billion by 2032, according to Fortune Business Insights. This boom is driven by the increasing use of internet-connected devices and AI services, demanding more data center capacity. Mandala Partners' report forecasts an additional $26 billion investment in Australia's data center capacity by 2030 to meet this demand.
The Hazelwood project could be a game-changer for the Latrobe Valley, which has faced high unemployment since the closure of the Hazelwood mine and the shift away from coal-fired power. Local government is embracing the opportunity for new investment, aiming to transform the economy. However, environmental concerns have been raised, particularly regarding water supplies. Friends of Latrobe Valley Water's Tracey Anton emphasizes the need for detailed water sourcing plans and management to protect the region's drinking water, especially with competing interests like mine rehabilitation.
