New transmission capacity in Sydney to be funded by data centres

After receiving unprecedented levels of interest for new data centres, Australia’s largest transmission operator confirmed data centre connections to the transmission network in the Sydney basin can only proceed after user-paid network upgrades are delivered.

Transgrid Executive General Manager of Network Jason Krstanoski said the scale and speed of data centre growth presents a significant challenge for Sydney’s electricity network providers.

“Unprecedented interest to connect data centres demands a transparent approach that protects electricity consumers and safeguards system security and reliability,” Mr Krstanoski said.

“There is insufficient capacity in Sydney’s transmission network today to connect any of the 20 GW of connection enquiries we have received for new large electrical loads.”

Approximately 1.5 GW of capacity has recently been allocated to signed data centre connection agreements in Western Sydney. The average demand for electricity in New South Wales is between 7.5 GW and 10 GW.

Additional large-scale data centre connections to transmission Sydney will require augmentation of the transmission network.

Further technical analysis has identified a pathway to unlock up to 2 GW of additional capacity through targeted network investments, including a new South Creek 500/330 kV substation and additional substation and transmission line upgrades in Western Sydney.

“These augmentations would unlock additional capacity for some new data centres in Sydney, with the cost to be borne by those proponents,” Mr Krstanoski said.

“Consistent with regulatory frameworks and government policy, 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.”

Transgrid expects demand for available capacity will continue to exceed supply, even after proposed augmentations are delivered. As a result, capacity will continue to be allocated through a transparent process based on the order in which customers sign connection agreements and commit to funding the required transmission augmentations.

Alongside this work, Transgrid is strengthening coordination across the electricity sector to better plan for future large-load connections.

“The rapid emergence of significant data centre demand requires a coordinated approach across the energy industry,” Mr Krstanoski said.

“We are working closely with distribution network service providers, AEMO, governments and major customers to improve forecasting, share information and support coordinated planning for future large-load developments.

“The work underway across the sector will help ensure the electricity system continues to support economic growth while maintaining reliability and affordability for all consumers.

“We will continue engaging with data centre proponents on available connection pathways and opportunities across the broader NSW network, including locations outside Sydney basin where additional network capacity may be available.”

For more information about Transgrid’s coordinated approach to data centre connections, please visit: https://www.transgrid.com.au/about-us/network/network-connections/datacentres-and-electricity-capacity-in-nsw/

Media enquiries: Mark Nolan 0429 047 136