77% of Australia's $70B Data-Centre Bet Has No Power

By Daniel Rao · October 24, 2026

Australia wants to be the AI capital of the Asia-Pacific. It has a plan, billions of dollars in announced investment, and the backing of governments desperate to look like winners in the AI race. There is just one small problem: most of its data centres can't plug in.

A Bloomberg review of company disclosures, published October 23, found that more than three-quarters of the 40-plus large data centres planned or under construction around Sydney and Melbourne — representing more than A$100 billion (US$70 billion) of projected investment — have not publicly confirmed they have secured electricity supply or grid connections. Just 23% have. In Sydney, seven of 28 active projects have confirmed power. In Melbourne, the figure drops to three of 15. That isn't a pipeline. That's a wish list with a power cable missing.

The story gets worse from there. While developers were announcing gigawatts, residents were organising against them, the grid operator was quietly admitting it couldn't connect them, and one of the country's biggest property groups was walking away from a A$1.2 billion project because the locals refused to have it. Australia's data-centre boom is being strangled from both ends — by copper that doesn't exist, and by people who don't want it.

Note: the Bloomberg original sits behind a paywall. Every figure below is drawn from the independent relays of its October 23 report — Business Standard, The Edge Malaysia, The Edge Singapore and The Malaysian Reserve — cross-checked against Reuters and Australian press coverage where the stories overlap. They agree on every number quoted.

Photo: Sydney, where 21 of 28 planned data centres have yet to confirm they can plug in. Photo: Dietmar Rabich / Wikimedia Commons (CC BY-SA 4.0).

The 23% Figure That Should Terrify Canberra

Let's sit with that number for a moment. Bloomberg contacted 25 developers to verify the power arrangements of more than 40 projects. GreenSquare, one of the operators, declined to comment on its power arrangements — though it said it was "working closely with relevant authorities and infrastructure partners to support long-term operational performance". CDC Data Centres said it had "robust delivery plans in place for all sites currently under construction", with power delivery timelines as anticipated. Nine others declined to comment or didn't directly answer questions about future projects. The rest didn't respond at all.

In the industry, secured power agreements are the clearest gauge of whether a project is actually advancing. A data centre without a grid connection is, as one analyst memorably put it this week, an expensive shed. Three-quarters of Australia's announced pipeline are expensive sheds.

The geography of the boom explains the collision course. Australia bet on data centres partly to capitalise on its vast open spaces and clean-energy potential — but the pipeline clustered around Sydney and Melbourne, where almost two in five Australians live, because that's where the fibre networks and the reliable power already are. So the developers put enormous industrial electricity loads in the country's densest suburbs, on top of infrastructure that was already stretched, and then acted surprised when the neighbours and the grid operator objected.

We cross-checked Bloomberg's figures against Reuters' September reporting on the Goodman withdrawal and the Australian trade press on NextDC's plunge this week — the numbers line up across every source. We also checked the licence pages for both photos in this article on Wikimedia Commons this morning: the Sydney panorama is CC BY-SA 4.0, the pylon shot is public domain.

Melbourne's Power War: When Neighbours Beat a Billion-Dollar Company

The clearest demonstration of how this plays out arrived on October 21, when NextDC — Australia's largest listed data-centre operator — slashed its forecasts and watched its shares collapse by more than 40% in a single session, erasing roughly A$3 billion in market value and sending the stock to a nine-year low. We covered the trading halt that preceded the plunge earlier this month — this is the sequel, and it's uglier.

The problem is power, not demand. Jemena, the electricity distributor supplying NextDC's M3 facility in West Footscray — a site market watchers have taken to calling "Mordor", which tells you something about how the industry feels about it — suspended work on the 66,000-volt line upgrade needed to feed the site. Jemena cited safety concerns and restricted access to work sites, both stemming from community and stakeholder opposition, plus a local council withholding consent while more community consultation happens. Work isn't expected to resume before February 2027; the next step-up in grid supply now arrives in the 2028 financial year.

The residents' objection was not abstract. The plan involved erecting 22-metre power poles through their neighbourhood. NextDC cut its fiscal 2027 net revenue guidance to A$475–500 million from A$615–640 million, and underlying EBITDA to A$245–265 million from A$385–410 million — a downgrade of more than a third, driven almost entirely by roughly A$140 million of M3 contracts it had to strip out of guidance. The board has put all new development projects and land acquisitions on hold. CEO Craig Scroggie told investors the company has no plans to raise equity and could recycle capital if needed.

The market verdict was savage. Plato Investment Management portfolio manager Dave Allen — whose fund has been shorting the stock since 2021 — pointed to "enormous capital spending", "rising borrowing costs" and a "contested social licence for data centres". MST senior analyst Hasan Tevfik went further, calling NextDC a "profitless company" with "growth ambitions too large". NextDC now sits among the 30 most-shorted stocks on the ASX, with short interest at 8.5%. Citi, RBC and JPMorgan still rate it a buy, arguing the delays are a timing issue. The neighbours in West Footscray, one suspects, would find that analysis adorable.

Project Mars: The $1.2 Billion Facility That Died in Lane Cove

If NextDC is the story of a data centre stalled, Goodman Group is the story of one that never got started. In September, Australia's biggest property company abandoned its A$1.2 billion Project Mars — a 90-megawatt facility planned for the Sydney suburb of Lane Cove — after withdrawing its development application to the state's planning department.

The details are damning. The proposed facility would have stood about 20 metres from the nearest home and 160 metres from a public school. Hundreds of objections were filed during the planning process. In its withdrawal letter, Goodman said the "policy and regulatory environment for large-scale data centre development has evolved significantly" and that it had considered the changes "together with feedback received through the planning process, including the views of the local community". Translation: the locals killed it, and the rules were getting harder anyway.

The most telling part came later, when Goodman conceded during a Senate inquiry into data centres that Project Mars had failed to win a "social licence" — after a lawmaker accused the company of showing contempt for local residents. A A$1.2 billion investment, one of Australia's 20 largest listed companies, defeated by a suburb that didn't want 90 megawatts of humming infrastructure next to a primary school. If you want to understand why Bloomberg's 23% figure is so low, Lane Cove is your answer in miniature.

Photo: The bottleneck, in a single frame: high-voltage transmission infrastructure. Transgrid says Sydney cannot connect any of the 20GW of large-user enquiries it has received. Photo: Ron Clausen / Wikimedia Commons (CC0, public domain).

A Grid Running on Fumes

The community opposition is only half the squeeze. The other half is physics. Transgrid, which operates New South Wales' transmission network, said in August that Sydney does not have enough transmission capacity to connect any of the 20 gigawatts of enquiries it has received from large new power users. Read that sentence again: not some of them — any of them.

Half of that proposed demand has emerged within a 12km radius of Transgrid's Sydney West substation — the equivalent of the peak winter electricity load of the entire state of New South Wales, concentrated in one small area. Only about 1.5GW of data-centre capacity is covered by signed connection agreements in Greater Sydney, and all of those projects are still waiting to connect. Transgrid has identified a pathway to unlock up to 2GW more through a new South Creek substation and associated upgrades — with the costs, it pointedly noted, to be borne by the proponents whose demand makes the upgrades necessary.

The official data is already showing the gap between announcement and reality. The Australian Energy Market Operator says more than a third of proposed data centres that would tap the main grid were cancelled last year. And the scale mismatch is colossal: BloombergNEF counts more than 20 gigawatts of announced and early-stage data-centre capacity against an operational fleet of just 1.5 gigawatts. As BNEF analyst Tushna Mehta told Bloomberg: "Access to energy is already a major issue. Data centre capacity is being built much faster than the new generation needed to supply it."

Ross Israel, head of global infrastructure at Queensland Investment Corporation, told Bloomberg that AI is "the biggest new demand driver we have seen in electricity in 50 to 60 years". The country already has more than 160 operating data centres, concentrated in Sydney and Melbourne, consuming roughly 2% of grid electricity. AEMO projects that share could rise to about 6% by 2030 and 13% by 2036. The government is courting investors and streamlining approvals for a boom the wires physically cannot carry.

Update, Oct. 24: the numbers behind the grid crunch

Update, Oct. 24: the full Bloomberg report (via Business Standard) puts hard numbers on the collision course. BloombergNEF counts more than 20 gigawatts of announced and early-stage data-centre capacity in Australia against an operational fleet of just 1.5 gigawatts. “Data center capacity is being built much faster than the new generation needed to supply it,” BNEF analyst Tushna Mehta told Bloomberg. Half of Transgrid’s 20 gigawatts of Sydney enquiries sit within a 12-kilometre radius of its Sydney West substation — the equivalent, Transgrid says, of the peak winter electricity load of the entire state of New South Wales, in one small area. The Australian Energy Market Operator projects data-centre demand will rise from about 2% of grid electricity today to roughly 6% by 2030 and 13% by 2036. And power is not the only constraint: industry-commissioned analysis estimates Australian data centres use some 5.5 gigalitres of water a year for cooling — a sliver of national consumption, but a real problem where projects cluster in growth corridors already stressed by drought.

The 15-Metre Problem: Noise, Water and Fire

Then there is the question nobody in the industry likes to linger on: what it is like to live next to one of these things. Residents near NextDC's West Footscray facility — some living as close as 15 metres away — told a parliamentary inquiry last month that they want compensation for noise, pollution and potential fire risks. A 90-megawatt facility 20 metres from a bedroom wall is not a planning abstraction; it is a quality-of-life calculation that no amount of "robust delivery plans" corporate language can paper over.

Water is the next fight. Industry-commissioned analysis estimates Australian data centres use about 5.5 gigalitres of water a year, largely for cooling — roughly 0.04% of national consumption, a number the industry will happily repeat. But that national average obscures the local reality: when projects cluster in growth corridors already stressed by drought, the local impact is far greater. And the clustering is the whole strategy.

Bronwyn Cumbo, who researches data centres at the University of Technology Sydney, told Bloomberg: "What we are seeing is rising public resistance to AI, particularly generative AI. Many are planned to be built near homes, schools, farmland and natural areas, and alter the experience and livability of these places." That resistance is now showing up in elections — Victoria's state Labor government has already banned data-centre builds near community sites as the issue becomes politically radioactive.

Our Take: This Is a Social-Licence Failure, Not a Power Shortage

Strip away the corporate language and the pattern is embarrassingly simple. The industry announced A$100 billion of projects in suburbs, next to schools, on grid infrastructure it hadn't secured — and then treated the resulting backlash as an unforeseeable external event. It wasn't unforeseeable. It was the predictable consequence of shoddy planning: you cannot concentrate 20 gigawatts of electricity demand in a 12km radius of one substation, on top of the country's two most populous cities, and be shocked when the grid operator says no and the neighbours organise.

The botched part is that the developers had a real alternative and ignored it. Australia genuinely does have vast open spaces and clean-energy potential — the original pitch for the boom. Building there would have meant investing in transmission lines and fibre instead of piggybacking on suburban infrastructure. It would have been slower and more expensive. So the industry chose the cheap, fast route — cluster everything in Sydney and Melbourne — and is now discovering that cheap and fast has its own costs: cancelled projects, gutted share prices, and a social licence that Morgans Financial analyst Nick Harris described this week, in a note to clients, as "becoming an increasingly significant headwind", warning that investors are "becoming concerned more delays could occur and question what the knock-on effect might be."

The honest read: Australia's AI-hub ambition isn't dead, but the version of it built on suburban megawatts is. The projects that survive will be the ones that secure power before announcing, consult before building, and treat the neighbours as stakeholders rather than scenery. Everything else is a press release with a power cable missing. And if you're an investor still modelling 20GW of announced capacity as though it will all get built — AEMO's cancellation figures suggest you should read Bloomberg's 23% number again.

It is worth noting this isn't an Australian disease. CoinDesk reported, citing a Bloomberg tally, that at least 106 data-centre projects in the US have been blocked or delayed this year alone over community opposition, involving roughly $198 billion of investment. And in the UK, Nvidia and Microsoft have warned the government it has about 12 months to win public consent for data centres before American-style opposition takes hold. The pattern is global; Australia is just the latest place where the announcement came before the electricity.

Frequently Asked Questions

How many Australian data centres actually have power secured?

According to Bloomberg's October 23 review of company disclosures, just 23% of the 40-plus large data centres planned or under construction around Sydney and Melbourne have publicly confirmed electricity supply or grid connections. In Sydney, 7 of 28 active projects have confirmed power; in Melbourne, 3 of 15.

Why did NextDC's shares crash?

NextDC cut its fiscal 2027 forecasts on October 21 after distributor Jemena suspended grid upgrade works for its M3 Melbourne facility amid community opposition, with no resumption expected before February 2027. Revenue guidance fell to A$475–500 million from A$615–640 million, and shares dropped more than 40%, erasing about A$3 billion in market value.

What happened to Goodman's Project Mars?

Goodman Group withdrew its A$1.2 billion, 90-megawatt Project Mars application in September 2026 after hundreds of local objections. The Lane Cove, Sydney facility would have stood ~20 metres from homes and 160 metres from a public school; Goodman later conceded at a Senate inquiry it had failed to win "social licence".

Can Sydney's grid handle the data-centre pipeline?

Not currently. Transgrid said in August that Sydney lacks the transmission capacity to connect any of the 20GW of large-user enquiries it has received. Only ~1.5GW of data-centre capacity has signed connection agreements, and upgrades — including a new South Creek substation — must be funded by the developers themselves.

How much power will Australian data centres use?

The 160-plus operating data centres consume about 2% of grid electricity today. The Australian Energy Market Operator projects that could rise to roughly 6% by 2030 and 13% by 2036.

Sources

Bloomberg reporting by Keira Wright and Benjamin Liu (October 23, 2026), via Business Standard, The Edge Malaysia, The Edge Singapore and The Malaysian Reserve; Reuters reporting by Christine Chen, Sydney (September 28, 2026); Australian Energy Market Operator; BloombergNEF; Transgrid 2026 Transmission Annual Planning Report; Morgans Financial; and corroborating coverage from marcustoday.com.au, sharecafe.com.au, sourcefirstnews.com, nexa.news and CoinDesk. Australia's AI ambitions have hit political headwinds before — this week it also drew a hard line over AI training on local culture.

Daniel Rao covers AI infrastructure, energy and the politics of technology for TechPulse USA.