Why Morwell is considered a “compelling” site for a new mega data centre

Affordable land and electricity, reliable utilities, digital infrastructure and a skilled workforce are making Australia more attractive to foreign data centre investment, evidenced by a new Morwell-based centre that will likely become one of the country’s largest.

What happened: On January 15, Singaporean company Keppel announced it had secured the rights to lease a 123-hectare site at Hazelwood to build and operate a data centre. 

The site is within one of Gippsland’s Renewable Energy Zones (REZ), which the company said will help give the centre access to reliable and cheap energy. 

The company’s plan is to capitalise on what Keppel’s Manjot Singh Mann, CEO of Connectivity, described as the “megatrend” of digitalisation and AI, by investing early to “secure early and exclusive access to power, water and fibre connectivity at strategic sites in key datahubs”.

“The site near Morwell offers significant scalability, with clear pathways to securing competitively priced green power, non-potable water for cooling, and low-latency fibre connectivity, making it a compelling location to site next-generation AI campuses,” the CEO said.

What exactly is a data centre?

What impact will it have on Gippsland’s energy and water? And will it create local jobs that last beyond the construction phase?

The Monitor spoke to a data centre expert, Research Associate of Strategic Technologies at the United States Studies Centre, Johanna Lim, about the development and the growing number of data centres in Australia.

A building full of tech

The centres contain stacks of servers, which include computers and networking equipment to store, process and transmit large volumes of digital information constantly.

• 🗣️ “Data centres are basically the backbone of the digital economy,” Lim said. “They underpin our digital lives. They allow us to access the cloud, internet, banking apps, healthcare systems, transportation and use AI tools like Chat GPT and Gemini.”

• Why do they take up so much land? The basic answer is that IT and energy infrastructure chews up a lot of space. Also, Keppel has spoken about the potential for future expansion on the site.

Are data centres here to stay?

“It's going to be a permanent and growing part of Australia's economy,” Lim said. “The data centre market capacity in Australia is projected to double from 2025 to 2030.”

She said international companies are looking to Australia to build centres because there is relatively affordable land, affordable electricity, reliable utilities, existing digital infrastructure and a skilled workforce.

• Will this create more jobs? Lim said that increasing data centre investments will encourage more employment, particularly for construction jobs and operational jobs.

Are renewables powering this development?

A lot of data centre companies are committed to running on 100 percent renewable energy by 2030.

• 🗣️ “Energy costs are one of the biggest expenses for data centres so there is an incentive to use cheaper renewable energy,” Lim said.

What does the local council have to say?

• “With the closure of coal-fired power stations and associated industries announced for 2028 and 2035, investment of this nature is critical to providing certainty for the local workforce and creating new pathways for skilled workers,” Latrobe City Council said.

What are the concerns?

Use of water: A frequently cited concern for data centre development is the use of large volumes of water to cool the servers. Lim said companies were trying to address this by investing more in innovating solutions and using more recycled water.

• Research by Mandala Partners shows data centres currently consume 0.2 percent of Melbourne’s water, and this is expected to rise to 0.9 percent by 2030.

Help or hinder the energy transition: One of the risks to Australia’s renewable energy targets cited by the Climate Change Authority in 2025 was the growing energy requirements of data centres around the country.

• Research by Mandala Partners also shows that the national energy consumption of data centres in Australia is currently two percent, and expected to increase to six percent by 2030.

Associate professor at Griffith University, Joel Gilmore, told our sister publication the North Shore Lorikeet that data centres risk prolonging the lives of our aging fossil fuel power stations, delaying the shift to renewables.

• 🗣️ “If a new data centre joined the grid tomorrow … we would need to supply them with power. In the very short run, we probably can’t build new renewables in 24 hours. So the way that we would do that is ramp up the output of coal power stations.”