Without further restrictions, the high-tech hubs could force up the price of energy or overload the power system, legal and planning experts warned, forcing some organisations to turn off their lights.
The warnings came at the fifth hearing of the NSW government's data centre inquiry on Thursday, which was also told state and national guidelines were under way.
More than 90 data centres have been built in NSW to date as companies including Microsoft, Amazon, AirTrunk and NextDC strive to meet rising demand for artificial intelligence tools.
But concerns have been raised about their high demand for energy and water resources, as well as infrastructure and land requirements.
Governments across Australia had discussed rules for data centre approvals, NSW Energy Minister Penny Sharpe said, and focused on their energy use, infrastructure needs, and transparent reporting.
The biggest concern for state energy ministers, she said, was ensuring data centre's energy demand did not overwhelm the power grid.
"Consumers shouldn't have to pay more," Ms Sharpe said.
"If you want to have a data centre you've basically got to pay for it – not just connection charges and slight augmentations but overall so consumers are not having to bear increased costs."
The NSW government was also developing guidelines for data centre approvals, she said, though they were not ready to launch.
Concerns about data centre power consumption were not confined to Australia, University of Sydney law professor Penelope Crossley said, with dire examples emerging in the US.
In one state with multiple data centres, for example, school staff were asked to conserve energy to avoid rising costs.
"One of the Virginia school districts this morning instructed their teachers not to use the lights because they were concerned about not having sufficient electricity," she said.
Australian regulators could also take lessons from regulations in other nations, Dr Crossley said, about mandating batteries as a back-up power source rather than diesel generators, and the long-term effects of temporary moratoriums.
But technology could evolve to address some resource issues, University of Sydney physics professor David Reilly said, including local advances.
Quantum computing breakthroughs could assist AI processes, while cryogenic cooling reduced data centres' water demands, he said.
"We see a world where you can build out a very large data centre in the middle of Australia, in the middle of the state, where it's an arid desert area but the opportunity for renewable energy and enormous amounts of energy storage … from cryogenics changes the equation dramatically," he said.
The inquiry will report findings by September 30.
