Expectation 3 — what it is and why it matters now
The Commonwealth Government released its National Framework for the Regulation of Data Centres in late 2024. It sets out eleven expectations covering electricity, water, heat, land, noise, safety, community, and resilience. Expectation 3 is the water one, and it introduces something that did not previously exist in the national policy landscape: a formal expectation that data centres demonstrate they are minimising potable water consumption and making the best use of available water sources.
The Framework is not yet law. It is a policy statement that foreshadows regulation, and it is already shaping what planning authorities ask for in development applications. If you are developing a data centre in South East Queensland and your water strategy has not been stress-tested against Expectation 3, it is worth doing that now, before lodgement, because the questions are coming.
Expectation 3 has three limbs. Data centres should minimise potable water consumption in cooling system design. They should investigate non-potable water sources and use them where feasible. And they should demonstrate that water consumption aligns with local supply capacity.
That third limb is the one that creates most of the complexity in SEQ, because the local supply picture is more constrained than many developers realise.
The SEQ water supply picture
South East Queensland's bulk water supply is managed by Seqwater, which supplies drinking water to around 3.8 million people across the region. The total combined storage capacity across Seqwater's catchment dams and Somerset, Wivenhoe, North Pine, Hinze, Leslie Harrison, Ewen Maddock, Baroon Pocket, Cooloolabin, Borumba, and Lake Macdonald is approximately 2.26 million megalitres.
The region's water security strategy — the South East Queensland Water Security Program — is a $3.8 billion, decade-long investment addressing the reality that SEQ will support a population of 5.4 million by 2046. The strategy includes advanced water treatment plants, expanded water grid infrastructure, recycled water schemes, and a proposed desalination facility upgrade. The $1.26 billion Southern Regional Water Pipeline stage 2, the $1.16 billion Enoggera advanced water treatment plant, and a proposed expansion of the Gold Coast Desalination Plant are the headline items.
The point is not that SEQ is running out of water. It is that the region is actively managing a constrained and growing supply situation, and a data centre developer who walks into a planning assessment with a water demand figure and no supply strategy is going to have a difficult conversation.
Why cooling technology is a lock-in decision
A standard evaporative cooling tower for a hyperscale facility will consume in the range of 3–5 litres of water per kWh of IT load cooled. At 100 MW of IT load, that is between 2.6 and 4.4 gigalitres per year. That number is not a rounding error in SEQ's water budget.
The technology choice made at detailed design cannot be unwound at operations. A developer who selects evaporative cooling on potable water supply, receives approval on that basis, and then finds that the recycled water connection they assumed would be available is delayed by two years, is in a difficult position. The facility is built. The commitments are made. The water demand is real.
The alternatives each have a different approval and supply profile. Air-cooled systems avoid the water demand entirely but carry a significant energy penalty — 20–30% higher power consumption at high ambient temperatures — which creates a different regulatory conversation under Expectation 1 (electricity). Direct liquid cooling and immersion cooling eliminate the cooling tower demand but require facility design decisions that are difficult to retrofit. Hybrid approaches — free cooling with an evaporative assist — reduce the demand without eliminating it and require a more nuanced supply case.
The practical implication is that the water approval strategy and the cooling technology selection need to happen in the same design conversation, not in sequence. The water engineer needs to be in the room when the MEP is selecting the cooling system, not after the specs are locked.
The Western Corridor Recycled Water Scheme
SEQ has one of Australia's most significant recycled water infrastructure assets in the Western Corridor Recycled Water Scheme. The scheme was built during the 2006 to 2009 Millennium Drought at a cost of approximately $2.5 billion. It comprises three advanced water treatment plants at Bundamba, Gibson Island, and Luggage Point, and a 200-kilometre pipeline connecting them to Wivenhoe Dam and to industrial users along the corridor.
The scheme has capacity to treat around 230 megalitres per day to a quality above the Australian Drinking Water Guidelines. It currently supplies recycled water to a number of industrial users in the corridor, including CS Energy's Swanbank and Tarong power stations.
For a data centre developer considering an SEQ location, the Western Corridor scheme is worth understanding for two reasons. First, a facility located within or adjacent to the corridor has a credible non-potable supply option that directly addresses Expectation 3's second limb. Second, the scheme's history — it was built, mothballed because dam levels recovered, and has operated at partial capacity since — means that connection is not automatic and the supply security case needs to be made carefully.
Seqwater and Queensland Urban Utilities are the relevant bodies for a connection inquiry. The lead time for a formal supply assessment is measured in months, not weeks, and it needs to happen before the development application is lodged if you want to be able to represent the supply strategy credibly in the planning documents.
The Queensland approval pathway for large water users
A data centre with significant water demand in Queensland will typically encounter the water approvals framework at two levels.
Development approval. Under the Planning Act 2016 and the State Planning Policy, a development application for a data centre is assessed by the relevant local government (typically Brisbane City Council or a SEQ council) with referral to the Department of State Development for large or state-significant facilities. Water supply, stormwater management, and wastewater are assessed as part of the infrastructure context. The Water Supply (Safety and Reliability) Act 2008 governs the licensing of water service providers, and the approval pathway for a private water supply arrangement — such as a direct supply from the recycled water scheme — involves Seqwater as the bulk supplier and the relevant retailer.
Resource entitlement. If the proposed supply involves groundwater or a surface water allocation, the Water Act 2000 and the relevant Water Resource Plan apply. Most SEQ data centre projects will not need a resource entitlement if they are connecting to reticulated supply, but a project proposing to supplement with bore water or creek water in a water plan area will need to work through that process separately. The lead times are significant: water resource assessment processes under the Water Act can take 12 to 18 months.
The practical sequencing issue is that both the development approval and the water supply arrangements need to be substantially progressed before construction commences, and the two processes are not synchronised. A developer who lodges a DA without a settled supply strategy may find that the DA approval conditions require the supply strategy to be resolved before connection — which can delay commissioning by a year or more.
What Expectation 3 requires in practice
The Framework does not prescribe specific metrics. It sets a principle — minimise potable use, use non-potable where feasible, align with local supply capacity — and leaves the demonstration to the applicant. That is both a flexibility and a risk: what "adequate demonstration" looks like will vary by assessment context, and a document that satisfies a planning officer in one council may not satisfy the state referral agency.
The elements of a credible Expectation 3 response in an SEQ development application are likely to include: a water balance model quantifying the facility's demand under different cooling scenarios; a desktop assessment of non-potable sources available at the site (including the Western Corridor scheme if relevant); a comparison of cooling technology options with their respective water and energy profiles; a connection feasibility letter from the relevant water service provider if a non-potable source is being relied upon; and a statement of alignment with SEQ's regional water security strategy, demonstrating that the demand has been considered against the supply context.
None of that is technically complex. All of it takes time to prepare properly, and none of it can be done by the environmental consultant after the DA has been lodged and the planning officer has asked for it.
What to do with this
If you are in feasibility or early design on a Queensland data centre:
- Treat the cooling technology decision and the water supply strategy as a single integrated decision. They have different lead times, different costs, and different risk profiles, but they are not separable.
- Commission a water balance early. A preliminary balance at 30% design is enough to identify whether the potable demand is material and which non-potable options are worth investigating. This work should be done before cooling system procurement, not after.
- Make a connection inquiry to Seqwater or Queensland Urban Utilities before lodgement if the supply strategy relies on the recycled water scheme. A supply confirmation letter — even a preliminary one — is worth more to the DA than any amount of assertion in the planning documents.
- Check whether a resource entitlement is required. If the project proposes any groundwater component, even as a backup supply, get advice on whether the Water Act process needs to be initiated in parallel with the DA process.
- Structure the Expectation 3 response as a narrative, not a checklist. Planning officers and state referral agencies respond better to a document that tells a coherent supply story — here is the demand, here are the options, here is why we chose this approach, here is how it fits the regional supply context — than to a table of metrics.
The National Framework for the Regulation of Data Centres is the direction of travel, not the destination. The water expectation is already shaping assessment conversations. The developers who engage it proactively, at design stage, will have a faster and more predictable approvals path than those who treat it as a documentation exercise.
This article is general information, not project-specific advice. Requirements vary by council and site. Book a project review for advice on your project.