Sydney Water confirms $1.2 billion recycling plant could supply data centres

Key Points

• Sydney Water’s $1.2 billion Badu Yarragul Water Resource Recovery Facility at Kemps Creek has opened with capacity to treat 35 million litres of wastewater each day.
• The facility could eventually double its treatment capacity to 70 million litres a day as Western Sydney’s population and business activity grow.
• Sydney Water managing director Darren Cleary confirmed there is an opportunity for the recycled water to be used by data centres, while saying their infrastructure must not affect services for other customers.
• Water-quality expert Professor Stuart Khan warned that the growing demand from data centres was not specifically accounted for in the Greater Sydney Water Strategy developed in 2022.
• Khan said diverting recycled water to a new industry could require Sydney to consider how another source of future water supply would be secured.
• The Kemps Creek facility can support water connections for up to 140,000 new homes and businesses, including development associated with Western Sydney International Airport.
• Sydney Water has also confirmed that a planned wastewater treatment facility at Camellia-Rosehill, expected to open by 2032, will supply recycled water to data centres.
• Community campaigners have raised concerns about whether data-centre developments could place additional pressure on water resources during future droughts.
• NSW currently has more than 60 operational data centres, while 18 projects in the state-significant development pipeline represent $61.22 billion in proposed capital investment.
• Professor Khan has questioned whether highly purified recycled water could eventually be directed towards drinking-water supplies instead of being reserved for industrial uses.
• Sydney Water says purified recycled water for drinking remains a possibility under the long-term Greater Sydney Water Strategy, but a decision would require regulatory approval and community and government acceptance.

Sydney Now Magazine (SNM) October 6, 2026 – Sydney Water has confirmed that a newly opened $1.2 billion wastewater recycling facility at Kemps Creek could supply recycled water to data centres as the sector expands across New South Wales. The Badu Yarragul Water Resource Recovery Facility currently treats 35 million litres of wastewater a day and has plans to increase that capacity to 70 million litres. The development has also prompted questions about how Sydney should prioritise recycled water as demand from data centres grows, particularly because the industry was not explicitly accounted for when the Greater Sydney Water Strategy was developed in 2022.

Why could the Kemps Creek recycling plant supply data centres?

The Badu Yarragul Water Resource Recovery Facility at Kemps Creek was opened last month as part of efforts to strengthen Western Sydney’s resilience to drought and changing climate conditions.

The facility has been designed to treat approximately 35 million litres of wastewater each day. That volume is equivalent to roughly 14 Olympic-sized swimming pools.

According to the information supplied by ABC News, there are plans to double the facility’s treatment capacity to 70 million litres per day as Sydney’s population and economic activity continue to increase.

Sydney Water says the treated water will be suitable for non-drinking purposes, including use in homes, industrial and business activities, agriculture and the greening of public spaces.

Sydney Water managing director Darren Cleary said there was an opportunity for the facility to support data centres.

“There’s a real opportunity for this to be used for data centres,” Mr Cleary said, according to ABC News.

The potential use reflects the increasing water requirements associated with large-scale data-centre developments, while also providing an alternative to using drinking-quality water for industrial purposes.

What concerns have been raised about data centres and recycled water?

Professor Stuart Khan, who has published more than 200 peer-reviewed journal articles on water quality and treatment, has questioned how future recycled-water supplies should be allocated.

According to ABC News, Professor Khan said demand from data centres had not been included in the Greater Sydney Water Strategy, which was developed in 2022.

He said Sydney’s recycled-water schemes could eventually produce up to 140 gigalitres of water a year over the next couple of decades.

Professor Khan warned that if some of that water were allocated to an industry that had not been considered in the original strategy, authorities would need to determine how the resulting future supply gap would be addressed.

“If we take that away from customers, we give it to a new industry that wasn’t accounted for in the strategy, then we need to think about where we are going to replace that future water supply from,” Professor Khan said, as reported by ABC News.

His comments centre on water allocation rather than the technical ability of the Kemps Creek facility to produce recycled water.

The Greater Sydney Water Strategy was developed against a backdrop of population growth and increasingly unpredictable climate cycles, both of which can place additional pressure on Sydney’s water resources.

How much recycled water could the Kemps Creek facility provide?

The Badu Yarragul facility has the capacity to connect up to 140,000 new homes and businesses across Western Sydney.

That network is expected to include developments associated with Western Sydney International Airport.

The plant’s environmental impact statement and environment protection licence did not specifically identify data centres as a dedicated end use for the recycled water.

However, the documents refer to industrial and business use, which provides a broader category under which the water could potentially be supplied.

The distinction is important because the growth of data centres has accelerated alongside demand for digital infrastructure and computing capacity.

Professor Khan told ABC News that data centres represented an opportunity for Sydney, but said authorities needed to consider how recycled water should be prioritised between competing future uses.

What has Sydney Water said about paying for data-centre water infrastructure?

Sydney Water has said its investment programme is intended to ensure that infrastructure keeps pace with increasing demand.

Mr Cleary said Sydney Water was investing $14 billion in capital over the next five years.

He also said infrastructure required for data centres would have to be developed without affecting services provided to the wider customer base.

“The infrastructure that will be delivered for them [data centres] will have to be done in a way that doesn’t affect the services we provide to the broader customer base,” Mr Cleary said, according to ABC News.

He added: “So fundamentally they’ll pay their way.”

The comments indicate that Sydney Water expects data-centre operators to bear the cost associated with infrastructure required specifically to serve their developments, rather than shifting those costs to the wider customer base.

Will another Sydney wastewater plant also supply data centres?

Sydney Water has confirmed that another planned wastewater treatment facility will also provide recycled water for data centres.

The proposed Camellia-Rosehill wastewater treatment plant is due to open by 2032.

According to ABC News, Sydney Water has confirmed that the facility will supply recycled water to data centres.

The future plant forms part of the broader expansion of wastewater and recycled-water infrastructure as Sydney plans for population growth and new commercial and industrial developments.

The decision to identify data centres as a potential customer for recycled water also illustrates how the growth of the technology sector is becoming relevant to long-term water infrastructure planning.

Why are community groups concerned about water use by data centres?

Sanaa Shah, a senior campaigner with Sweltering Cities, has raised concerns about whether water consumption has been adequately considered in data-centre proposals.

Sweltering Cities advocates community-driven approaches to urban heat, particularly in Western Sydney.

Ms Shah told ABC News that local residents were concerned that they could face water shortages if data-centre demand increased significantly.

She said residents remembered earlier periods of drought and water restrictions and questioned whether similar rules would apply equally to data centres.

According to ABC News, Ms Shah described the current expansion of data centres as a rapid boom and said there was uncertainty surrounding several proposals.

She called for a moratorium on data-centre proposals until safeguards were established.

Her concerns included both energy and water resources, with the campaign group seeking assurances that large data centres would not place additional pressure on infrastructure or contribute to higher household energy costs.

How large is the data-centre development pipeline in New South Wales?

New South Wales already has more than 60 operational data centres, according to the Department of Planning, Housing and Infrastructure.

The department said the current state-significant development planning pipeline includes 18 data-centre projects.

Those projects have a combined proposed capital investment value of $61.22 billion.

The figures show why the question of water demand has become relevant to infrastructure planning.

Data centres require substantial infrastructure and resources to operate, including electricity and, depending on their cooling systems, water.

The scale of the proposed investment means decisions made now about recycled-water allocation could have consequences for long-term planning in Western Sydney and elsewhere across the state.

Could recycled water eventually be used for drinking in Sydney?

Professor Khan has also questioned whether the highly treated water produced at facilities such as Badu Yarragul could eventually be used to supplement Sydney’s drinking-water supply.

He said the technology required to produce highly purified and safe recycled water was already established.

Perth was cited by Professor Khan as an example of where purified recycled water technology has been developed.

However, the purpose of the Kemps Creek facility is currently to provide a non-drinking water source.

Professor Khan said using the facility for drinking water would require the appropriate regulatory approval.

The distinction means that the plant’s current design and purpose do not automatically allow the treated water to enter Sydney’s drinking-water system.

What is Sydney Water’s position on purified recycled drinking water?

Sydney Water has confirmed that purified recycled water for drinking remains a possibility under the long-term Greater Sydney Water Strategy.

Mr Cleary said the issue was ultimately a question for government and the community.

“It’s really a question for community and government about whether that is something that they would accept and value,” Mr Cleary said, according to ABC News.

He said a decision would need to be made within the next 10 years.

The statement leaves open a longer-term policy choice about whether recycled water should remain primarily a non-drinking resource or become part of Sydney’s drinking-water supply.

Any move towards drinking-water use would require regulatory consideration and community acceptance, in addition to the technical capability to purify the water.

What does the development mean for Sydney’s long-term water planning?

The development brings together two separate areas of infrastructure planning: Sydney’s need to secure reliable water supplies and the rapid expansion of digital infrastructure.

The Kemps Creek facility was developed to support drought resilience and provide recycled water for non-drinking uses.

Its potential use by data centres means authorities will need to account for an industry whose growth was not specifically included in the 2022 Greater Sydney Water Strategy.

Professor Khan’s comments raise the question of whether recycled water allocated to data centres could reduce the volume available for other future customers.

Sydney Water, meanwhile, has said its investment programme and approach to infrastructure costs are intended to ensure that the broader customer base is not disadvantaged.

The issue is therefore not simply whether recycled water can be supplied to data centres. It also concerns how much recycled water will be available in the future, which customers should receive priority, and how additional infrastructure will be funded.

What is the background to the Kemps Creek recycling facility?

The Badu Yarragul Water Resource Recovery Facility was developed as part of Sydney’s broader response to population growth, climate uncertainty and pressure on water supplies.

Its initial capacity of 35 million litres per day provides recycled water for non-drinking applications across Western Sydney.

The planned expansion to 70 million litres per day is intended to accommodate future growth.

The facility’s potential customer base includes homes, businesses, industrial users, agricultural activities and public-space greening, while Sydney Water has now confirmed that data centres could also use the recycled supply.

The broader Greater Sydney Water Strategy was developed in 2022 to address long-term water security challenges. Since then, the expansion of data-centre infrastructure has become an additional consideration for planners.

The planned Camellia-Rosehill facility, due to open by 2032, is expected to further expand Sydney’s capacity to provide recycled water and will also supply data centres.

What could this development mean for Western Sydney residents and businesses?

The immediate implication is that recycled water could become an important part of the infrastructure supporting Western Sydney’s expanding commercial and technology sectors.

For data-centre operators, access to recycled water could provide a non-drinking source for relevant industrial requirements.

For households and businesses, the central issue will be whether future recycled-water allocation can accommodate new industrial demand without reducing the reliability or availability of existing services.

The scale of the NSW data-centre pipeline means this question is likely to remain relevant as more projects progress through planning.

What could happen to Sydney’s water strategy over the next decade?

The long-term direction will depend on population growth, climate conditions, the volume of recycled water produced, the expansion of data centres and decisions by governments and regulators.

Sydney Water has indicated that purified recycled water for drinking could be considered within the next decade.

At the same time, the utility has confirmed that recycled water will be available to data centres, including through the future Camellia-Rosehill facility.

For Western Sydney residents and businesses, the development means recycled water is increasingly likely to become part of discussions about how the region accommodates population growth and major new industries.

For data-centre operators, it could provide another source of non-drinking water while requiring investment in dedicated infrastructure.

The central planning question will remain how Sydney balances these competing demands while maintaining the reliability of water services during future periods of population growth, drought and climate variability.