OpenAI has abandoned plans to cool its planned S7 data center in Sydney, Australia, with recycled water. OpenAI nixed the plans in favor of a closed-loop liquid cooling system. According to a report in Reuters, Developers of a massive data centre OpenAI wants to build in Australia have abandoned plans to cool it with recycled water, switching to a more energy-intensive method that undercuts government efforts to curb the booming sector’s drain on resources.The 612-megawatt ‘S7’ facility, planned as one of the largest data hubs in the world, initially aimed to tap Sydney’s treated wastewater to chill its servers, which would have reduced dependence on potable water sources and significantly lowered the cooling system’s energy requirements. The move was designed to avoid depleting local drinking supplies while minimizing electricity use, according to planning documents filed in April.
What made OpenAI walkaway from recycled water plan
However, after failing to secure planning permission to build a pipeline to serve the data center, NextDC, the developer, decided to change its plans. Australian data centre operator NEXTDC told Reuters that it walked away from negotiations with local utilities after hitting regulatory roadblocks over the permits needed to construct a dedicated wastewater pipeline. In December 2025, OpenAI and NextDC announced that they had signed a Memorandum of Understanding that would see the ChatGPT-maker use some of the data center’s capacity, with the option to scale over time.“Recycled water … has real merit and it can support lower PUE and better overall sustainability and NEXTDC considers it wherever that infrastructure exists,” CEO Craig Scroggie said in an email. PUE, or power usage effectiveness, is a closely watched metric of energy used for cooling and other overheads beyond computing. “Potential sources were canvassed in early planning. In Western Sydney, the enabling infrastructure ... is not yet in place,” Scroggie is said to have added.The S7 datacentre facility will now rely on a closed-loop liquid cooling system that circulates coolant directly across processing chips and dissipates heat into the air using fans. While the revised system uses no drinking water, analysts say the fan arrays will consume significantly more electricity at a time when Sydney’s grid operator warns transmission capacity is already stretched thin by data centre demand.S7 is expected to deliver thousands of direct and indirect jobs over the course of its construction, as well as ongoing technical, manufacturing, engineering and operational roles.
