Piper Alderman advises coNEXA on landmark recycled water infrastructure for NEXTDC’s S4 Sydney data centre

Piper Alderman has advised coNEXA Infrastructure Partners (coNEXA) on the development and financing of a major new recycled water project in Western Sydney. coNEXA, through its AquaNet business, will supply up to 16 million litres of recycled water a day from its Fairfield recycled water plant to cool NEXTDC’s S4 Sydney data centre at Horsley Park. It is believed to be the largest recycled water connection to a data centre in Australia, with NEXTDC as the first customer.

The privately funded project has IPART approval, with construction due to start in November 2026 and first water expected in late 2027. It will put over 5 billion litres a year of treated wastewater that would otherwise be released to the ocean to productive use, and build a recycled water network that other industry and local councils in Western Sydney can connect to over time.

Piper Alderman acted for coNEXA across the whole project, from initial structuring through to financing. Our work included supporting the coNEXA team in:

• Project structuring: designing the project vehicle and group structure to support delivery on a group secured corporate finance basis, while preserving the option of future project financing on a multi-user basis.
• Customer agreement and offtake: negotiating the long-term recycled water infrastructure and supply agreement with NEXTDC, and the supporting intra group supply, network and operations arrangements.
• Design and construction: preparing and negotiating the design services agreements and the two split package design and construct contracts for the pipeline, pump station and reservoir works, including parent company guarantees and financier tripartite arrangements.
• Property: acquiring the pump station and reservoir sites, and title and easement due diligence for the pipeline corridor.
• Planning and water regulation: advising on planning and approvals, and on the Water Industry Competition Act 2006 (NSW) and IPART regulatory framework, including scheme and operational approvals, operator licensing and compliance oversight arrangements.
• Sewer mining: advising on the sewer mining arrangements with Sydney Water under which wastewater is extracted from the sewer network and treated to supply the scheme.
• Foreign investment and competition: obtaining FIRB advice and approvals for the land and easement acquisitions, and advising on ACCC and competition law matters.
• Debt financing: funding the project under senior secured facilities, including advising on facility documents, financier tripartite arrangements, intra group funding and legal opinions to coNEXA’s financiers on the project documents.

Kurt Dahl, Chief Executive Officer of coNEXA Infrastructure Partners, said:

“Delivering Australia’s largest recycled water connection to a data centre is a milestone for coNEXA and for Western Sydney’s growing hyperscale sector, turning treated wastewater into a reliable cooling supply. A first of a kind project of this scale needed responsive advisers who could see the whole picture. Martin and the Piper Alderman team brought the project, construction and financing pieces together, understood what mattered to our business and gave us clear, decisive advice that kept a complex, multi party deal on track.“

The matter was led by Deputy Managing Partner Martin Lovell, national head of Piper Alderman’s Projects, Infrastructure & Construction practice. He said:

“Power gets most of the attention, but water is one of the key constraints on data centre growth. Water based cooling is more energy efficient than air cooling, but it needs a large and reliable water supply. Recycled water resolves that trade off, supporting cooling designs that need less power while putting treated wastewater to productive use. This is a landmark project for Western Sydney, and we were delighted to support coNEXA from structuring through to financing, with our projects and finance teams working as one to deliver a bankable outcome.“

Martin was supported by a core projects and finance team of Juniper Watson (Partner), Anthony Economou (Special Counsel), Shaun Clifford (Senior Associate) and lawyers India Bevan and Mallory Papps. The team also drew on partners Simon Venus, Alicia Chryssochoides, Marcus Andrews, Andrew Rankin, Mark Gordon and Maria Capati and their teams to support FIRB, planning, property, competition and other specialist aspects of the deal.