NextDC profit beats forecasts amid rising water and energy use

Australian data centre developer NextDC announced a profit that surpassed expectations, even as its water and energy consumption rose over the past year. The company's water usage effectiveness (WUE) ratio increased to 2.40 liters per kilowatt-hour, up from 2.25 the previous year. Its power usage effectiveness (PUE) ratio, which tracks electricity used for cooling and other overheads, also climbed to 1.49 from 1.44. Both metrics have shown a worsening trend for three consecutive years.

NextDC attributed the increased ratios to newly commissioned capacity running cooling systems before full IT deployment, as well as data reconciliation efforts that identified leaks and meter anomalies. "Higher water consumption during the year reflected a combination of portfolio growth and increased activity across operational, expansion and commissioning projects," the company stated in its sustainability report. It also noted that the year "also involved significant reconciliation and validation of water data, including investigation of isolated leaks, utility meter anomalies and differences between site and utility records."

These efficiency metrics are closely monitored by lawmakers and the public, serving as indicators of the strain the burgeoning data centre industry places on limited water and power resources. Globally, governments and regulators are increasingly implementing or considering restrictions on new data centre construction due to mounting concerns about electricity costs, water scarcity, land availability, and the impact on local communities. Australia is considering mandatory national standards for data centres, including requirements to build new renewable power sources instead of relying on the grid.

Despite these environmental concerns, NextDC reported a 16 percent revenue increase. The company swung to a profit of A$82.1 million for the year ending June, a significant turnaround from a A$60.5 million loss the previous year. This improvement was partly due to an accounting change recognizing a gain on property values. Underlying EBITDA rose 15 percent to A$248.8 million, exceeding analyst forecasts. Shares in NextDC saw a 3.3 percent increase by mid-session on Friday.

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Higher water consumption during the year reflected a combination of portfolio growth and increased activity across operational, expansion and commissioning projects. The year also involved significant reconciliation and validation of water data, including investigation of isolated leaks, utility meter anomalies and differences between site and utility records.