NSW Government Backs Data Centre Investment With New Sustainable Development Framework
The New South Wales (NSW) Government has endorsed major private sector investments in data centre infrastructure while launching a consultation process to guide their sustainable development. Projects supported by the state’s Investment Delivery Authority (IDA) are collectively valued at A$51.9 billion, reflecting strong demand for digital infrastructure linked to cloud computing and artificial intelligence. At the same time, the government is seeking industry and community feedback through a consultation paper aimed at balancing economic growth with energy, water and environmental considerations.
According to the NSW Government announcement, the newly released NSW Data Centre Consultation Paper outlines a principles-based framework intended to guide future development across the state. The initiative comes as data centre investment continues to accelerate, with around 90 facilities already operating in NSW and the value of projects growing by an average of 65% each year over the past three years.
Data centres now represent around 12% of all non-residential building investment in the state. The government says the consultation will help ensure the rapid expansion of digital infrastructure aligns with broader priorities, including energy and water security, infrastructure capacity and air quality management.
Consultation Paper Sets Principles for Sustainable Expansion
The consultation paper proposes a framework designed to support sustainable and equitable investment while ensuring communities benefit from the economic opportunities created by the digital economy. Written feedback from industry stakeholders, local communities and other interested parties is being accepted over a six‑week consultation period.
The initiative is part of a broader national push to strengthen digital infrastructure to support advanced technologies such as cloud services and artificial intelligence. Recent policy activity includes efforts aligned with Australia’s wider innovation agenda, such as the National AI Plan to drive innovation and transformation and regional initiatives like Victoria’s AI strategy supporting technology-led growth.
Significant Private Sector Interest in Digital Infrastructure
The Investment Delivery Authority has endorsed a series of large-scale data centre developments across several local government areas, including Blacktown, Penrith, Fairfield, the Hills Shire and the City of Ryde. The projects involve major international and domestic infrastructure developers, including Microsoft Datacenter (Australia), NEXTDC Limited, Goodman Property Services and STACK Infrastructure.
However, the assessment process has also filtered out proposals considered too early-stage or speculative. The IDA declined to endorse approximately A$40.7 billion in data centre and technology proposals during its evaluation.
Earlier in the same month, the authority endorsed 14 energy projects valued at A$34 billion. These developments are expected to contribute to the NSW Electricity Roadmap and support the expanding digital economy, where energy-intensive data centre infrastructure requires reliable and increasingly sustainable power sources.
Balancing Digital Growth With Infrastructure Capacity
“New South Wales is a premium destination for data centres but we are only interested in working with proponents who have a long-term commitment to both this state and their social licence.” — Daniel Mookhey, Treasurer, NSW Government
“The scale of investment endorsed through the Investment Delivery Authority reflects strong private sector confidence in NSW as a home for this digital infrastructure.” — Daniel Mookhey, Treasurer, NSW Government
“At the same time, we recognise this growth must be managed responsibly. That’s why we’re releasing a consultation paper to inform a Data Centre Strategy that considers energy and water use, infrastructure capacity and the long‑term interests of NSW households and businesses.” — Daniel Mookhey, Treasurer, NSW Government
Planning and Public Spaces Minister Paul Scully noted that eight data centre projects worth more than A$10 billion were approved in the past year alone, including what has been described as the largest data centre in the Southern Hemisphere.
“Data centres are important for jobs, data sovereignty and start up creation but we want them to be the best of the best and this consultation paper will help achieve that.” — Paul Scully, Minister for Planning and Public Spaces, NSW Government
Industry and Trade Minister Anoulack Chanthivong highlighted the broader economic role of digital infrastructure, noting that data centres underpin cloud computing, artificial intelligence and other high‑value technology industries. Their expansion is expected to support innovation ecosystems, skilled employment and globally competitive investment across the state.
“Data centres are a cornerstone of the modern digital economy, enabling cloud computing, artificial intelligence and other high‑value technology industries.” — Anoulack Chanthivong, Minister for Industry and Trade, NSW Government
As Australia continues to expand its digital infrastructure capacity, related initiatives are also exploring advanced technologies to strengthen energy systems supporting this growth, including projects focused on quantum computing for remote grid optimisation. These developments reflect the increasing interdependence between digital infrastructure, energy networks and national innovation strategies.
