ET Datacenters reports that Australia's AI data-centre boom faces power constraints and local opposition.
Australia's ambition to become an artificial intelligence (AI) hub for the Asia Pacific region faces threats from stretched power grids and local opposition, according to a Bloomberg review. More than three-quarters of the 40-plus large data centers planned or under construction in Sydney and Melbourne face risks.
These projects represent more than A$100 billion ($70 billion) of projected investment. However, only 23 per cent of these projects have publicly confirmed securing electricity supply or grid connections, Bloomberg reported.
Project Delays and Cancellations
The consequences of friction and delays are already apparent. Nextdc Ltd. cut its profit forecast after Melbourne residents blocked transmission line installations, almost halving the value of its shares. In Sydney, Goodman Group abandoned its A$1.2 billion Project Mars development last month. The proposed 90-megawatt facility would have been built near homes and a public school, prompting hundreds of objections.
Official data also shows a gap between announced and built projects. Over a third of proposed data centers that would tap Australia's main grid were cancelled last year, according to the Australian Energy Market Operator (AEMO). Australia has more than 20 gigawatts of capacity in announced and early-stage data center projects, compared to an operational fleet of just 1.5 gigawatts, BloombergNEF noted.
Grid Strain and Water Access
Sydney's electricity grid is already struggling to accommodate the scale of the boom. Transgrid, which operates the statewide power network, stated in August that the city lacks transmission capacity to connect any of the 20 gigawatts of inquiries it has received from large new power users. Half of this proposed demand has emerged within a 12-kilometer radius of its Sydney West substation.
AEMO projects that Australia's data center electricity consumption could rise by a quarter each year to roughly 6 per cent by 2030, and 13 per cent by 2036. Access to water is another hurdle. Industry-commissioned analysis estimates that Australian data centers use about 5.5 gigalitres of water annually for cooling. Local impacts could be far greater when projects are clustered together, including in growth corridors already facing drought stress.
Residents near Nextdc's facility in Melbourne complained about noise, pollution, and potential fire risks during a parliamentary inquiry last month. Bronwyn Cumbo, a researcher at the University of Technology Sydney, noted rising public resistance to AI data centers planned near homes and schools.