The Insider/
The data centre rush heads west

Billions are pouring into Australian data centres. But with markets in the Eastern States tightening, global capital will look west – and WA has a choice to secure this enormous investment on our terms.

The computing demand for AI processing requires large data centres that can be approved and built right now. So, WA needs to act with haste, partnering with community, industry and government, to set the terms of this investment. We can use this opportunity to lock in financial benefits, new renewable generation, transmission infrastructure and lasting community contributions from trusted proponents.

If we have clarity about requirements before these data centres arrive, we can attract quality projects that require investment certainty while delivering a boost to our economy and securing benefits important to local communities.

Eastern States are reaching capacity

New South Wales is running out of room. Its network operator Transgrid has received data centre connection enquiries totalling 14 GW in Western Sydney alone (which is close to the winter peak load of the entire state). Capacity in the Western Sydney 330kV network is almost fully committed, and new loads cannot connect without major augmentation. A parliamentary inquiry is underway, and some local councils have called for a freeze on new approvals.

Victoria has been more likely to face broad community resistance to new builds. Residents in Melbourne suburbs are petitioning against new and expanding facilities over noise, diesel backup generation, water use and pressure on local infrastructure.

Pushback in other advanced economies

The same pattern is playing out worldwide. According to Gallup, seven in ten people in the US oppose constructing AI data centres in their neighbourhood. Local opposition has blocked or delayed around $64 billion of projects since mid-2024, with active campaigns in 40 states. Interestingly, the resistance is often associated with unease about Artificial Intelligence itself, and what it means for jobs, water and energy prices.

Europe has made the sums harder again. Power costs there run between one and a half and three times US levels, environmental rules are demanding, and Ireland and the Netherlands have placed moratoriums on new connections around their capitals. The industry is being pushed to find jurisdictions that still say yes.

What WA offers

With land, proximity to Asia, and subsea data cables landing in Perth and the Pilbara, Western Australia is firmly on the investment list – with scores of projects either built or currently under consideration.

Meanwhile, the shift to renewables and batteries is pushing WA’s wholesale prices and volatility down. In the December 2025 quarter, wholesale prices fell 13 per cent year on year to $69.55/MWh, with renewables supplying 52 per cent of power and 1225 MW of new battery storage online (AEMO). The catch is that the SWIS needs thousands of kilometres of new transmission to meet forecast demand, and every large new load adds to it.

What is in it for us?

A growing public discussion is asking what data centres give back to the communities that host them. Independent Senator David Pocock notes that data centres employ very few people once built. He also points to a thin tax record: Amazon Web Services reported $3.4 billion of Australian income and paid $61 million in tax, while Microsoft’s data centre arm reported $1.5 billion of income and paid none.

By 2030, Australian data centres are forecast to use as much electricity as every Victorian household combined, with water use more than tripling and wholesale power prices up 26 per cent by 2035. The question for any host community, including in WA, is “what’s in it for us?”

WA has done this before

WA has answered a version of this question already. I argued last year that the state’s immunity to the renewables pushback was real but temporary. The State Government has since released its Community Benefits Guideline for large-scale renewables: published contribution rates, place-based plans built with communities and Traditional Owners, regional administration through Development Commissions, and timing that lets developers commit before a development application and pay once operational. It is early, but the framework is already in place, so there is still time to shape outcomes. The same logic sits behind genuine social licence (as outlined by my colleague Rod Mapstone).

Set the terms now

Data centres need a broader framework. They draw heavily on power and water and create few ongoing jobs once built, so the expectations around community, generation and infrastructure contributions should be designed from the start.

By leading the industry and community conversation now, we can look to require contributions in the following areas:

• Power partnerships. Renewable offtake agreements to secure new generation, or co-located solar, wind and storage, so a data centre adds new supply to the grid rather than just drawing from it.
• Transmission funding. Have large loads help pay for the new SWIS transmission infrastructure their demand requires, to speed delivery and reduce costs to WA households.
• Community benefits. Published, tiered contributions for host communities, modelled on the renewables guideline.

The right mix will vary by project and region. With global capital highly mobile, WA should agree the approach now, so the rules are clear and the community builds trust and acceptance for these huge drivers of economic growth and diversification.

The ReGen view

WA can welcome this investment and still decide the terms. We have the advantage of watching it happen elsewhere, and a working model of our own to build on. Government should convene the conversation now, with industry and communities in the room together.

At ReGen Strategic we operate at the intersection of community engagement, stakeholder management, government relations and project approvals. Through the Approvals Navigator, our joint pre-approvals and approvals practice with Tactica Advisory, we bring senior WA government experience, including former ministers and assistant ministers, to projects that need approvals, energy connection and community strategy moving together. The same early, proactive engagement that helps get a renewables or critical minerals project across the line is what a data centre proponent, or a host community, needs now.

If you are planning a data centre in WA, or preparing for one in your community, we would welcome the conversation.

Image Source: iseek