NextDC delays Melbourne data centre expansion due to power pole protests and regulatory hurdles

Consensus Summary

NextDC, Australia’s largest data centre operator, has faced a major setback in its expansion plans for the West Footscray facility after community opposition and regulatory delays forced it to revise its financial forecasts and defer critical power upgrades. The company announced on Wednesday that its net revenue for the current financial year would fall to between $475 million and $500 million, down from an earlier projection of $615 million to $640 million. The delays, attributed to protests over the installation of 15-metre to 22-metre-high power poles and broader community resistance, have pushed back the next grid supply to the M3 data centre until 2028, according to ABC and Guardian reports. Jemena, the energy supplier, has suspended parts of the network works required to increase power capacity, leaving the project in limbo. The company’s share price plummeted by 40 per cent following the announcement, reflecting investor concerns over the prolonged uncertainty.

The controversy stems from NextDC’s plans to double the size of its West Footscray data centre, expanding it from 5 hectares to 10 hectares and increasing its power capacity from 60 megawatts to 225MW. The facility, located just 10 kilometres west of Melbourne’s CBD and 15 metres from residential homes, has long faced opposition from locals over noise, pollution, and the visual impact of towering power infrastructure. The Age notes that the power poles, designed to carry 66,000 volts—160 times the voltage of standard residential poles—have become a flashpoint, with residents in Yarraville blocking construction crews last month. The Guardian reports that Jemena halted work due to safety concerns, lack of access, and council non-approval of the poles, which rise as high as 22 metres in some areas. The delays have also triggered broader questions about Victoria’s ability to support the rapid growth of AI-driven data centres without adequate grid infrastructure.

Key figures involved in the dispute include NextDC’s CEO Craig Scroggie, who acknowledged the challenges in a call with investors, and local resident Sean Brown, a member of the Citizens of Tottenham group, who has led opposition to the project. Scroggie expressed disappointment over the technical delays but remained confident in the project’s eventual approval, citing compliance with planning rules and the need for greater community consultation. Brown, however, framed the issue as a fight for local liveability, stating that the community’s concerns had not been adequately addressed. The Age highlights political pressure on Premier Ben Carroll ahead of the November state election, with local Labor MPs calling for a pause on new developments. Meanwhile, the Victorian government has introduced new regulations, including 150-metre buffer zones between data centres and homes, in response to growing public backlash.

While the three outlets largely agree on the core issues—community opposition, power supply delays, and financial revisions—they differ in some details. The ABC emphasizes the financial impact on NextDC, including a $1.3 billion capital expenditure outlay and the company’s $7 billion valuation, while The Age and Guardian focus more on the broader infrastructure challenges and political implications. The Age also notes that NextDC’s share price had already fallen 44 per cent since June, suggesting pre-existing investor concerns. Additionally, there are discrepancies in the height of the power poles, with the ABC citing 15 metres and The Age and Guardian mentioning up to 22 metres in some locations. The timing of the protests is also slightly varied, with the ABC referencing September and the other outlets referring to last month.

The unresolved issues center on the timing of the power supply resolution and the Victorian government’s planning approval for the expansion. NextDC expects the earliest possible approval for the project’s later stages to be February 2027, but the Guardian attributes this delay to the upcoming state election and the government entering caretaker mode. The Age suggests that the broader challenge extends beyond NextDC’s project, as Victoria’s rapid push to attract AI infrastructure has outpaced grid planning. Residents, meanwhile, remain firm in their demands for remediation and compensation, with Brown warning that the new government after the election will face continued pressure. The outcome of the November state election and the government’s response to community concerns will likely determine the future of the West Footscray data centre and similar projects across Victoria.