Supporting the backbone of the digital economy while protecting consumers and system reliability

Data centres are fast becoming critical economic infrastructure, underpinning the digital services that drive Australia’s modern economy.

As demand for digital services grows, the scale, pace and geographic concentration of proposed data centre developments—particularly in the Sydney basin—represent a material step‑change in electricity demand on the NSW transmission network.

Transgrid is committed to supporting data centre investment and connections to the transmission network. To ensure connections to the transmission network follow a fair and transparent process while protecting the needs of electricity consumers and system reliability, Transgrid has published a policy that clarifies when capacity is allocated to specific load applications for planning purposes. 

The Network Capacity Allocation Policy applies to any relevant large load, meaning an inverter-based load greater than or equal to 30 MW or 30 MVA. The Policy confirms that network capacity is only allocated upon signature of a Network Connection Agreement (NCA). 

There are two pathways to NCA signature:

  1. a conditional NCA signed before performance standards have been agreed, and
  2. an NCA signed after performance standards have been finalised.

The conditional NCA will only be issued for signing by Transgrid if applicants have commenced the performance standard assessment and if they can demonstrate meaningful progress against planning criteria relating to permits, land ownership, construction, long-lead equipment and financing.

Capacity allocated through NCAs obtained under either of the two pathways described above will remain valid only if all planning criteria are satisfied within three months of NCA signing.

The Policy provides additional transparency on the connection process for large load connections and ensures that the network is prudently and efficiently planned for through consideration of credible projects with a high likelihood to proceed to connection.

Any questions can be directed to our dedicated customer connections team.

Capacity to connect to the transmission network in the Sydney basin is largely exhausted

The Sydney basin, and particularly Western Sydney, has experienced an unprecedented concentration of proposed data centre demand.

Transgrid has undertaken detailed analysis of transmission network capacity across the Sydney basin to understand the implications of this emerging demand on all network users, including households, through to the 2030s.

This analysis has found that projected load growth forecast on the distribution network, combined with the scale and timing of proposed data connections, will increase pressure on parts of the transmission network in the coming decade.

Available capacity may soon be fully utilised by new connections.This means new data centres or other large load customers will not be able to connect in this area without major network augmentation or major projects that would increase capacity and maintain reliable supply.

These upgrades are complex, capital‑intensive and must be carefully planned to ensure they are prudent, efficient and cost‑reflective.

Work is underway to strengthen the connection process for large loads

Transgrid is working with government and electricity sector bodies on frameworks to support the timely connection of new loads, without negatively impacting electricity consumers.

This aims to:

  • Strengthen the large‑load connection process,
  • Ensure investment is cost‑reflective, and
  • Require large users, such as data centres, to play their role in maintaining system security, strength and reliability during the energy transition.

This approach supports economic growth while safeguarding the broader community and the long‑term resilience of the power system.

Ensuring consumers are no worse off

As data centre developments progress in Australia, it is essential that existing electricity consumers are no worse off.

New, large electricity loads—such as data centres—must:

  • Fund the infrastructure required to supply them, and
  • Contribute appropriately to system reliability.

Households and businesses should not bear the cost or risk associated with this growth. This principle underpins how Transgrid plans, invests in, and operates the transmission network.

Other connection options are available across NSW

Since late 2024, Transgrid has received data centre connection enquiries totaling more than 10 GW within a 12 km radius of Sydney West—equivalent to the peak winter load for the whole of NSW concentrated in one local area.

While the Sydney basin is constrained at this time, there may be options to connect in other locations across the NSW transmission network. Capacity may be available in other parts of the network, subject to technical studies and regulatory approvals. 

Transgrid encourages data centre proponents to engage early to explore alternative locations and connection points, and staged or innovative connection solutions where appropriate.

Talk to our connections team

If you’re planning a new data centre connection in NSW, contact our customer connections team to discuss:

  • feasible connection points,
  • indicative timing,
  • technical studies required, and
  • potential augmentation pathways (where relevant).

Our dedicated customer connections team can assist proponents to explore all available connection options. This can include advice on network augmentation needed to connect or about locations on the network that are able to support future growth. This includes in regional NSW where major transmissions lines are being built or upgraded.

Contact: Email us at connections@transgrid.com.au

Letter to data centre proponents

Outlining the current capacity situation at Sydney West and Transgrid’s approach to new connections.

Document

20260617 - Update On Network Capacity

PDF 129.95 KB

Network capacity allocation policy

The Transgrid policy described in this document sets a clear standard for when transmission capacity is allocated to specific load applications for planning purposes.

Document

Transgrid Network Capacity Allocation Policy

PDF 317.93 KB

Further information

Transgrid forecasting methodology for Transgrid connected data centre load

To help improve planning and certainty for customers and the electricity sector, Transgrid is under taking additional due diligence across all available demand forecasts, with a particular focus on the treatment of potential data centre loads and other large emerging electricity users.

Together with our distribution network partners, we are also working on a 25-year data centre forecast for NSW to ensure these and future connections are managed responsibly. In a joint project with DNSPs, Transgrid has engaged Baringa to deliver a NSW data centre forecast. Transgrid will consider the methodology established by Baringa to support future iterations of data centre forecasts within the business.

Information is current as of August 2026. Capacity status may change as connection applications progress and network studies are updated.