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Australia's AI Data Centres: Power Sets the Pace

Australia’s data-centre build is real and accelerating, but the grid, not demand or capital, decides where and when it lands. This note sets out what is being built in Victoria, New South Wales and South Australia, the power and planning rules now shaping it, and what that means for the people who build it. Figures are from public sources as at 30 September 2026, listed at the end.

Updated 1 October 2026: we checked the STACK, NEXTDC, Goodman, Equinix and Microsoft projects against the companies’ own announcements and project pages. What we found is under “What the operators say” below, and on the map.

Six things to know

  1. Power sets the pace. AEMO now expects data centres to use about 34 TWh a year by 2035-36, seven times today’s 5 TWh and 13% of NEM demand. A year ago its forecast was 21.4 TWh by 2034-35.
  2. Sydney is full. Transgrid says Sydney’s transmission network cannot connect any of the 20 GW of large-load enquiries it has received. About 1.5 GW is signed in Western Sydney, and upgrades paid for by the data centres could unlock up to 2 GW more.
  3. The build is moving west and out. Melbourne’s west has cheaper land than Western Sydney, and the gigawatt proposals are heading to regional NSW, where HumeLink and the Hunter line land. South Australia’s first gigawatt-scale proposals are Firmus’s AI factories at Tailem Bend and Stirling North.
  4. The rules now bill the owner. Federal standards due early 2027, NSW’s August 2026 guidelines and Victoria’s 22 September plan all put new generation, storage, network upgrades and non-drinking cooling water on the data centre.
  5. The pipeline is inflated. About 36% of AEMO’s 2025 project list has already been cancelled, and NSW’s guidelines cite an Oxford Economics estimate that six of every seven requested megawatts are phantom. Treat stated completion dates as optimistic.
  6. The swing factor is Victorian. The November 2026 state election decides whether the Western Renewables Link is paused and VNI West scrapped, and with them the renewable supply Melbourne’s data-centre cluster is expected to contract.

The market

Australia runs about 1.6 GW of operating data-centre IT load, and Sydney holds 57% of it: 917 MW across 51 facilities at H1 2026, with 116 MW under construction and 2,018 MW planned. Melbourne is the second market and the tightest, with vacancy of 3% against Sydney’s 4%. South Australia accounts for about 2% of data-centre electricity use.

ModelMain playersScale
Hyperscale developer-operatorsAirTrunk, CDCBlackstone’s 2024 deal valued AirTrunk at over A$24bn; CDC was valued at A$18.5bn at 30 Jun 2026
Listed colocationNEXTDC, Macquarie Technology, DigiCoNEXTDC: 740.1 MW contracted, 287.9 MW built
Global colocationEquinix, STACK, VantageSTACK SYD01, 450 MW, under NSW assessment
Cloud self-buildMicrosoft, AWS, GoogleMicrosoft A$25bn to 2029; AWS A$20bn over 2025–29
Developer-landlordsGoodman, Stockland, PGIM, GreenSquare, ZerraSingle projects of A$0.5–1bn in federal filings
AI factoriesFirmus (with CDC), NEXTDC S7 with OpenAIFirmus Project Southgate A$4.5bn initial

What is being built in VIC, NSW and SA

Our project map tracks 55 data-centre projects in Victoria and New South Wales that are under construction, approved or in planning, 15 of them under construction, plus 13 operating sites. NSW holds more of them and the largest. In South Australia, Firmus plans AI factories at Tailem Bend (about 1.0 GW of critical IT load at full build-out) and Stirling North, backed by a 12-year, 600 MW firm supply deal with Gunvor signed in June 2026.

Capacities below are as each source states them. IT load, total power demand and MVA are different measures, so they do not add up.

ProjectStateOperatorStated capacityStage (30 Sep 2026)
CDC Gregadoo, Wagga WaggaNSWCDC1.4 GW powerConcept; SEARs sought
Mamre Road campusNSWNot named1 GW powerResponse to submissions
NEXTDC S7, Eastern CreekNSWNEXTDC612 MWEIS in preparation; first phase 2H 2027
AirTrunk Kurri KurriNSWAirTrunk540 MW powerEIS lodged
CDC Marsden ParkNSWCDC504 MW plannedEarly construction
STACK SYD01, Erskine ParkNSWSTACK450 MWUnder assessment
NEXTDC S4, Horsley ParkNSWNEXTDC365 MW250 MW in progress, 115 MW in planning
AirTrunk MEL2, TullamarineVICAirTrunk354+ MWApproved; opening 2H 2027
Zerra, CampbellfieldVICZerra DC336 MW powerPlanning lodged
GreenSquare MEL1, SpotswoodVICGreenSquare240 MW ITPlanning lodged
NEXTDC M3 expansion, TottenhamVICNEXTDC225 MW campusPlanning lodged
AWS GlendenningNSWAWS193.6 MW ITApproved Sep 2026
Goodman MEL02, TruganinaVICGoodmanAbout 180 MVA, building APlanning lodged; investment decision due Oct 2026

Two clusters carry most of the work: Melbourne’s west (Truganina, Laverton, Brooklyn, Tullamarine, Campbellfield) and western Sydney (Eastern Creek, Kemps Creek, Marsden Park, Erskine Park), with Macquarie Park as a smaller inner-Sydney node.

What the operators say

What five of the biggest names report about their own sites, as at 1 October 2026:

  • NEXTDC (FY26 results, 27 August 2026) has raised S4 Horsley Park to 365 MW, with 250 MW in progress. It has 165 MW in progress at M3 West Footscray and early works under way at M4 Fishermans Bend, starting with 10 MW. It has also bought a site for M5 Melbourne, with planning work starting for up to 1.2 GW; the location has not been disclosed.
  • Goodman marked the start of construction at SYD01, Artarmon, on 3 March 2026: 61 MW of IT capacity in five 12.2 MW phases, backed by 90 MW of secured power, with the first phase ready in Q2 2028.
  • Microsoft is building at Cawley Road in Brooklyn, Woods Road in Truganina and Garden Drive in Tullamarine. Cawley Road’s first building has operated since February 2025, and generator commissioning is set for 14 October 2026. Woods Road and Garden Drive were each about 60% operational in August 2026, with the rest still being fitted out. In Sydney, an expansion of its two Station Road buildings at Seven Hills was approved in December 2022; Microsoft has not published whether it has been built.
  • STACK lists 432 MW across two Melbourne campuses in Truganina. MEL01 is 180 MW across four buildings. Its builder, Hickory, lists the last two (C and D) as completed, and in July 2025 STACK secured A$1.3bn of green financing for the campus’s next phase. MEL02 is a 252 MW single building.
  • Equinix says SY9x at Rosehill provides more than 14 MW now and will provide more than 28 MW when fully built out. We found no Equinix site under construction in Victoria, New South Wales or South Australia.

The common thread is phasing. A campus often opens its first hall years before its last, so fit-out, generator commissioning and plant lifts carry on long after a site is listed as operating.

What it costs

A hyperscale megawatt costs about US$10m to build in Australia (range US$7.9–12.1m, before IT equipment), the fourth-dearest market in Asia-Pacific after Japan, Singapore and South Korea. The shell is about 30% of that and fit-out about 70%.

Land is where Melbourne’s west competes: US$426–710/m² against US$852–1,278/m² in Greater Western Sydney and US$2,734–3,728/m² on Sydney’s North Shore.

Planning values understate the spend. NEXTDC M4’s planning development value is A$918m against its A$2bn announced cost; AirTrunk MEL2’s is A$974m against more than A$5bn reported. The planning figure is the building; the rest is plant and fit-out. The large headline commitments (Microsoft A$25bn, AWS A$20bn) also include operating spend, so the construction share of each headline dollar is smaller than it looks.

The power play

Demand. AEMO’s 2026 ESOO puts data-centre use at about 5 TWh in 2025-26 (2.8% of NEM operational consumption), about 15 TWh (7.8%) by 2029-30 and about 34 TWh (13%) by 2035-36.

The queue. AEMO counts 225 projects and 67 GW of proposed connection capacity, up from 38 GW a year earlier, but about 36% of last year’s list has since been cancelled, including more than 30% of projects classed as committed. NSW’s guidelines say utilities expect about 20% of applications in their queues to proceed.

WhereWhat binds
SydneyNo transmission capacity for any of 20 GW of enquiries; 1.5 GW signed; a new South Creek 500/330 kV substation and upgrades could unlock up to 2 GW, paid for by the data centres; real relief waits for Sydney Ring South in the mid-2030s
Western MelbourneData-centre loads are creating monitored network limits; some sites connect under load run-back schemes until upgrades land
NEM transmission queue17 projects totalling 9 GW at end June 2026: NSW 52%, VIC 31%, SA 17%

Who pays. The Commonwealth’s AI standards will oblige large data centres to underwrite their own new supply, pay full connection costs and cut load when asked, with legislation due early 2027. NSW already requires contracted supply to match average demand from year four, ten-year contracts with new projects, at least 40% wind, four-hour storage, and the ability to cut demand 25% for two hours without diesel.

What it does to prices. CEFC-commissioned modelling finds wholesale prices 26% higher in NSW and 23% higher in Victoria by 2035 if data centres add no new renewables, falling to 7% and 6% with an extra 3.2 GW of renewables.

The lines that decide timing (AEMO 2026 ISP): HumeLink December 2027; Sydney Ring North (Hunter Transmission Project) November 2029; Western Renewables Link November 2029, now under an independent cost review due by end-2026; VNI West November 2030 to 2031; Sydney Ring South 500 kV July 2033.

Water and planning

Victoria’s rules are the most prescriptive of the states we reviewed. Under the plan released on 22 September 2026, new sites will need a 150 m buffer from homes, will be prohibited in residential zones, and must cool with recycled or other non-drinking water. Applications already under assessment are not caught. NSW’s guidelines commit to SEARs within two months and assessment in 75 days or fewer, with 19 State Significant data-centre projects worth A$50.3bn in the system in July 2026. We found no South Australian data-centre policy.

Water is becoming an enabler as much as a constraint: Victoria’s plan points to Melton Recycled Water Plant already supplying an AWS data centre, and Melbourne Water has A$7.3bn of approved capital works for 2026-31, including upgrades at the Western Treatment Plant beside the western data-centre cluster.

What it means for construction and heavy lift

  • The buildings are tall and heavy. AWS Glendenning is three five-storey buildings just over 40 m; a PGIM site at Truganina is eight storeys at 34 m with a 25 m precast wall; Goodman’s Apollo at Macquarie Park is 45 m. Expect long crane programmes, large precast panels, and plant and generator lifts at height.
  • The grid work comes first. Every campus depends on terminal stations and substations. Transgrid’s ten synchronous condensers arrive from mid-2027, each weighing 260 t with a 160 t flywheel, and all are to be running by February 2029.
  • Generation follows. Batteries, solar and wind are being built to supply the new load. At Uungula, the only large wind farm under construction in NSW, turbine parts weigh up to almost 100 t.
  • Timing risk is real. A project without a connection agreement is a land bank, not a pipeline. Grid connections, the new planning buffers and November’s Victorian election all move dates.

Our project map shows these projects by sector (wind, data centres, power and water) with the latest news for each, focused on Victoria, New South Wales and South Australia. Click a project for its details. The map also labels capacity, draws the state borders and links to the National Heavy Vehicle Regulator’s oversize and overmass network map, so you can check route access for heavy transport.

What we could not confirm

  • A market-wide operating MW figure for Melbourne or Adelaide.
  • Any disclosed large data-centre supply contract with an Australian generator-retailer; Microsoft’s and AWS’s renewable totals are press reports of Senate submissions.
  • A South Australian government data-centre policy.
  • Where NEXTDC’s M5 Melbourne campus will be.

Sources

General information only, compiled from public sources as at 30 September 2026 and updated 1 October 2026. It is not investment, financial or engineering advice for any specific project.