investigation
Why WA is missing out on Australia’s $142b data centre boom

Australia’s data centre capacity is set to double by 2030, but as global technology giants pour billions of dollars into Australia’s data centres to meet the infrastructure demands of artificial intelligence, WA risks being left behind. An Australian Data Centre Forecast report by Data Centres Australia and DCByte found while there are only three 100 megawatt data centres operating in Australia — all on the east coast — there are 47 in the pipeline. Collectively, capacity will increase from 1.4 gigawatts of capacity to 3.2 gigawatts in the next four years. The scale of investment has amped up in recent weeks as companies increasingly look for capacity for the nation’s growing demand for data as the AI boom gathers pace. ASX-listed NEXTDC raised $750 million through a bond issue earlier this month, just days after completing a $1.5 billion capital raising. The data centre operator now has a $6.6b balance sheet to meet what it says is “strong demand” from AI customers. It came after WA mining giant Fortescue announced it will inject almost $1b into a green energy project to take advantage of “insatiable” data centre demand. Microsoft has also pledged $25 billion to expand its AI footprint in Australia, while Amazon is beginning a $20b national data centre build-out backed by new renewable energy investment. Data Centres Australia estimates the sector could be worth $142b a year to the Australian economy. “We could build the infrastructure here, becoming an exporter of intelligence and AI tokens,” chief executive Belinda Dennett said. “This is a once-in-a-generation opportunity to transform Australia’s economy, and we should not miss it.” But when global capital talks about investing in Australia, the money is still overwhelmingly heading east. Ms Dennett said about 96 per cent of Australia’s data centre capacity is concentrated in Sydney and Melbourne, or on their urban fringes. Australia has more than 300 data centres nationally, according to the Chamber of Commerce and Industry WA. WA has just 27. Of the 100MW data centres currently in the development pipeline, 24 are planned for New South Wales and 20 for Victoria. The gap is even wider when measured by power capacity. WA has about 30MW of usable data centre capacity, according to Ms Dennett, compared with about 850MW in NSW and 400MW in Victoria. “Western Australia is on a much, much smaller trajectory,” Ms Dennett said. “The pipeline in WA is slower, whereas in Sydney and Victoria it looks like capacity will double over the next five years.” NEXTDC’s own footprint shows the difference between WA’s current role and where the next wave of capacity is being built. The company already operates in Perth through its P1 Malaga facility and P2 Perth CBD site. It also has edge deployments in the Pilbara, pushing low-latency infrastructure closer to mining and resources operations. NEXTDC head of regional sales Claire Sangster said that mattered in industries “where performance and responsiveness are mission-critical”. But the company’s growth pipeline, while remarkably healthy, remains heavily weighted to the east coast. Its contracted forward orders, which refers to capacity secured but not yet billing, have jumped 60 per cent this year to 667MW. Most of that is tied to major east-coast projects, including its 350MW S4 hyperscale project in Sydney and a further 185MW at its M3 facility in Melbourne. By comparison, NEXTDC has about 4MW in progress in Perth. Across NEXTDC’s total contracted and planned capacity of 1398MW, more than 72 per cent sits in NSW and the ACT, nearly 17 per cent is in Victoria, and less than 4 per cent is spread across the rest of Australia, with the remainder offshore. “What we’re seeing in NSW and Victoria is exponential growth in data centre size, scale and number,” Ms Dennett said. “That’s simply not yet happening in Western Australia.” She said there are two reasons WA demand has not reached the heights of its eastern counterparts. “Firstly, data centres tend to be built where customers want them,” she said. Early demand often comes from global technology companies that want to be close to their biggest customers, still heavily concentrated in Sydney and Melbourne. The other factor is clustering. Data centres need to be close enough to support resilience and backup, but far enough apart that a single incident cannot take out multiple facilities. WA’s sparse distances and comparatively low population density do not work in the State’s favour. “As a result, large customers often specify location when tendering for work, and that strongly shapes where data centres are built,” Ms Dennett said. Still, WA is not out of the race longer term. CDC Data Centres, which has struck deals with global chipmaker Nvidia and local operator Firmus, is investing $415m in a new data centre campus at Maddington, about 20km south-east of Perth. When fully built, the site could deliver up to 200MW of high-density, AI-ready capacity, making it one of the largest data centre developments proposed in WA. “The Maddington data centre campus is on track and progressing as planned,” a CDC spokesperson said. “Construction remains aligned with our timetable, with the first facility expected to become operational in late 2026.” Other large projects are also emerging. Gingarah Energy is proposing the even-larger 240MW data centre and energy precinct on Karajarri country, south of Broome. Known as Project Meridien, the development is expected to run into the billions of dollars and is projected for completion by 2032, pointing to growing interest in regional data centres tied closely to energy supply. For WA, energy is both the opportunity and the constraint. Data centres need enormous amounts of reliable power, making grid access, generation capacity and planning approvals central to where new projects are built. Ms Dennett said governments could help attract more investment by giving clear signals to the market and making approvals more consistent. Planning and permitting are largely State-based and often involve local councils, meaning delays or uncertainty can quickly make one location less attractive than another. “The roles of governments, of all jurisdictions, are to be clear in signalling that this investment is welcome and making the market attractive,” she said. “Some of our members who have built in Western Australia have been very enthusiastic about how streamlined that process has been.” For its part, the WA Government has already tried to position the State as a data centre destination, publishing a prospectus as far back as 2022. Ms Sangster said WA also played a broader national role in supporting critical infrastructure across the North West Shelf, northern defence zones and into South-East Asia. She said NEXTDC would continue to progress expansion in WA, with investment being driven by new customer demand and the growth needs of existing clients. “While hyperscale investment has historically been concentrated on the east coast, Western Australia is increasingly well positioned to support future demand, underpinned by resilient power infrastructure and secure, private connectivity,” Ms Sangster said. Ms Dennett said those advantages would become more important as AI demand grew and customers looked beyond Sydney and Melbourne. “As congestion becomes an issue elsewhere, customers start looking for alternatives,” she said. “It’s why I don’t think the State will be left behind. Western Australia is well placed to capture more of that demand.”

investigationWhy WA is missing out on Australia’s $142b data centre boom

investigation
Why WA is missing out on Australia’s $142b data centre boom