The sites that will define the next cycle of AU data centre growth are forming quietly in Newcastle, Geelong, and a handful of regional industrial precincts that most Sydney-based developers are not monitoring closely.
This is not an argument that Sydney is wrong. Sydney’s existing cluster — NEXTDC S1/S2/S3, Equinix SY1–SY7, AirTrunk SYD01, CDC’s facilities — reflects genuine demand concentration. The financial sector, government agencies, and the existing fibre network all anchor Sydney. That cluster will continue to grow.
The argument is different: the projects that will shape the 2027–2030 supply picture are not going to be built in Kemps Creek or Eastern Creek, because the grid there is already committed, land values have risen to the point where development economics require hyperscaler pre-commitment, and the planning environment for new facilities in the Western Sydney M2 corridor has tightened considerably since 2022.
The projects with realistic development timelines, better grid economics, and available industrial land are in different geographies.
Newcastle and the Hunter: What’s Actually Happening
The Hunter Valley data centre story is not about data centres yet. It is about grid infrastructure.
Eraring Power Station — Australia’s largest coal generator at 2,880MW, located on the western shore of Lake Macquarie — has been one of the most discussed closure events in the Australian energy market for four years. Originally scheduled for closure in August 2025, the NSW Government extended its operating life to mid-2027 as an energy security measure (NSW Government announcement, March 2025). The facility employs approximately 450 people and is connected to the 330kV Hunter transmission ring that forms the backbone of electricity supply for the NSW Central Coast and Hunter regions.
When Eraring closes, that transmission ring does not disappear. The 330kV network remains — it connects to the Sydney transmission system and to the renewable energy zones (REZ) being developed in the Hunter-Central West corridor under the NSW Energy Infrastructure Roadmap. AEMO’s ISP (2024 edition) designates the Hunter-Central West Orana REZ as one of the key development zones for new renewable generation capacity, with a total capacity target of approximately 6,000MW.
For data centre developers, this creates a specific opportunity: the transmission infrastructure capacity that currently carries Eraring’s output southward to Sydney will, over the period 2027–2032, carry increasing renewable generation northward from the Orana REZ. The net transmission capacity utilisation during the transition period creates a window for new load connection at transmission voltage — potentially at lower augmentation cost than the equivalent connection in metropolitan Sydney where the network is more constrained.
The Tomago industrial precinct is the most advanced of the Hunter sites for data centre purposes. Tomago aluminium smelter — connected to the 330kV transmission system with a dedicated substation and historically consuming approximately 800MW of power — provides physical grid infrastructure that is in-situ and will not be demolished even if the smelter reduces operations. A data centre developer who secures land adjacent to or within the Tomago industrial precinct can make a credible argument for a transmission-level connection application that leverages existing infrastructure.
The Kurri Kurri site (former Norsk Hydro aluminium smelter, Lake Macquarie LGA) is another option. The Hydro aluminium smelter closed in 2012; the land has been partially developed for industrial use since, but large footprint industrial parcels remain available, and the grid connection infrastructure (while aged) provides a starting point for a connection assessment.
Geelong: The Cool Climate Asset
Geelong’s data centre case is different from Newcastle’s. It is not about stranded grid infrastructure. It is about three factors combining in a geography that Sydney and Melbourne can no longer offer at scale.
Factor 1: Climate. Melbourne’s design dry-bulb temperature for data centre cooling design is approximately 33°C (ASHRAE Climate Design Data, 2021 edition). Geelong’s proximity to the ocean and latitude position it at similar or slightly cooler dry-bulb temperatures. Sydney’s equivalent figure is approximately 38°C. For a data centre designed to free-cool using outdoor air for 40–60% of the year (economiser mode), the lower Melbourne/Geelong design temperature meaningfully reduces the proportion of the year when mechanical cooling is required, reducing energy consumption and improving PUE.
Factor 2: Industrial land at scale. Geelong’s Lara and Corio industrial precincts have large-footprint parcels available at land values that are significantly below Melbourne’s Laverton or Tullamarine equivalents. Development feasibility models for a 50MW+ data centre in Geelong are materially more favourable than for the same project in the inner Melbourne fringe — primarily because of land cost differential and the ability to control larger parcels for phased expansion.
Factor 3: Grid access opportunity. AusNet’s transmission network in the Geelong region has benefited from reduced industrial demand following manufacturing closures (Ford Geelong engine plant, Alcoa Point Henry), which reduced peak load demand on the local distribution network. Available headroom in the Lara-Norlane distribution zone is higher than in comparable Melbourne industrial precincts. Connection enquiry timelines for >10MW loads in the Geelong DNSP zone have historically been shorter than for equivalent loads in congested Melbourne zones.
The Geelong risk: Fibre carrier diversity is the genuine constraint. Primary fibre routes between Geelong and Melbourne are concentrated on the Western Ring Road and Princes Highway corridors. A data centre requiring diverse path entry (standard for Tier III and above) needs to either secure carrier commitments for route diversity that does not yet exist in the Geelong market, or build a dark fibre link to a Melbourne PoP as part of the project infrastructure. The capital cost of dark fibre build (approximately AUD 50,000–80,000 per km for urban/suburban conduit build) needs to be included in the development pro forma.
What Makes These Sites Different from a Developer’s Perspective
The data centre sites that will succeed in Newcastle and Geelong share a common characteristic: they are not competing on existing cluster network effects. Sydney’s cluster advantage is real — the concentration of carrier hotels, submarine cable stations, and enterprise customers creates a self-reinforcing ecosystem that a Geelong or Newcastle site cannot replicate.
What these regional sites can offer is different: first-mover advantage in a less-congested grid zone, industrial land economics that support development feasibility without a hyperscaler anchor, and a planning environment that is less complex than the State Significant Development pathway required in metropolitan NSW and Victoria for large facilities.
The developers who will win at these sites are the ones who treat the grid engagement as the first work item, not the last. A site in Lara or Tomago with a live DNSP/TNSP connection enquiry lodged and a preliminary connection advice received is categorically more developable than an identical site where the power conversation has not started.
Sources: AEMO Integrated System Plan 2024; NSW Government Eraring Extension announcement, March 2025; ASHRAE Climate Design Data 2021; AusNet Annual Planning Report 2025; AEMO Electricity Statement of Opportunities 2025; JLL AU Data Centre Report Q4 2025; Geelong industrial land sales data via Colliers International AU (public reports 2024–2025).