Sydney’s data centre boom is putting pressure on Transgrid, NSW’s largest electricity transmission network. Transgrid warned there was insufficient capacity to accommodate the 20 gigawatts (GW) of new electricity demand, much of it associated with data centres supporting cloud computing and artificial intelligence.
Transgrid said it had allocated around 1.5 GW of capacity to signed data centre connection agreements in Western Sydney in late August, doubling the electricity load in the area.
A Transgrid spokesperson said the company was now assessing network upgrades that could unlock up to 2 GW of additional capacity while identifying alternative connection opportunities in the Riverina and Hunter regions, where capacity is available.
Western Sydney faces capacity constraints
Transgrid said there had been a significant increase in demand for electricity connections in Western Sydney, creating challenges for developers seeking to establish new data centres.
“We continue to work with data centre proponents in response to unprecedented demand for electricity in Western Sydney, where demand to connect has significantly increased,” a Transgrid spokesperson said.
The transmission network has also identified a pathway to unlock up to 2 GW of additional capacity through upgrades to existing infrastructure, including a proposed South Creek substation and other substation and transmission line upgrades in Western Sydney.
According to Transgrid, the company was working with data centre developers and the NSW Government to establish planning and development pathways that would support investment while protecting consumers and network reliability.
“We recognise the significant benefits that data centres bring to NSW and we continue to support new large load applications that meet connection criteria,” the spokesperson said.
“Our priority is to achieve this while safeguarding system security and protecting the long-term interests of electricity consumers.”
Who will pay for the upgrades?
Transgrid’s Executive General Manager of Network, Jason Krstanoski, said the proposed upgrades would be funded by the data centre developers whose demand creates the need for additional transmission infrastructure.
“Where new large energy users drive the need for new transmission network infrastructure beyond their physical connection, those costs will be borne by the proponents creating that demand rather than existing electricity consumers,” Krstanoski said.
Transgrid expects demand for available capacity to continue exceeding supply, even after the proposed upgrades are delivered.
Capacity will continue to be allocated based on the order in which customers sign connection agreements and commit to funding the required transmission upgrades.
