Canberra data centre growth hit by land & power limits

TBH has warned that land and electricity constraints could limit data centre growth in Canberra, outlining its assessment in a new report on the ACT's digital infrastructure needs.

The territory faces a tight mix of limited local power generation, pressure on industrial land, water constraints and complex approvals for major projects. Those issues are emerging as Canberra seeks to strengthen its role in sovereign digital infrastructure tied to government, defence and intelligence work.

Canberra holds a distinct position in Australia's data centre market. While Sydney and Melbourne have larger commercial markets, the capital is closely tied to demand from federal agencies and national security requirements, including the need for secure onshore storage and processing.

Policy settings around critical infrastructure and information security are also adding to demand for domestic digital capacity, increasing pressure on the physical infrastructure needed to support new facilities in the ACT.

Power limits

Electricity supply is central to the challenge. The ACT generates very little of its own power and relies heavily on the interconnected New South Wales grid, while larger AI-enabled data centres can consume electricity on a scale closer to major industrial users.

That combination makes expansion more difficult because network upgrades can take time and congestion risks are rising, the report says. Energy planning, it argues, will shape how far Canberra can expand its data centre footprint.

"The ACT faces a distinct set of energy constraints - limited local generation, dependence on interconnected infrastructure and increasing grid congestion risk," said Travis Harvey, Director, TBH.

Harvey said the challenge could also create an opening for broader infrastructure investment if projects are planned at a larger scale.

"A precinct-scale approach could turn that challenge on its head. Rather than being treated purely as additional load, data centres could help anchor investment in substations, renewable energy hubs, battery storage and grid firming infrastructure that benefits the whole network," Harvey said.

Site pressure

Land availability is emerging as a second major constraint. TBH pointed to established industrial areas including Hume, Mitchell, Beard and Fyshwick, where logistics activity, urban growth and broader industrial expansion are competing for space.

That competition reduces the number of locations that can meet the requirements of a large data centre, which typically needs industrial land with access to high-voltage electricity, fibre links, water infrastructure and secure separation from surrounding uses.

"Large-scale data centres need industrial land with high-voltage electricity, fibre connectivity, water infrastructure, secure access and separation from surrounding uses - and that combination is becoming harder to find in Canberra," said Rob Hammond, Director and Global Data Centre Lead, TBH.

"Strategic land planning is now central to whether Canberra can convert its data centre opportunity into deliverable projects," Hammond said.

Water and approvals

Water supply adds another layer of difficulty for the ACT. Canberra's dry climate and history of drought mean long-term water resilience has become a significant issue for data centre developers, particularly for larger facilities that need reliable cooling systems.

Site selection is increasingly shaped by the availability of recycled water, closed-loop systems and liquid cooling options. In practice, that means water planning now sits alongside energy access as a core factor in deciding whether a project can proceed.

Approvals are also complex. Major projects can require environmental assessments, utility coordination and water licensing, while facilities tied to government, defence or other critical functions may need engagement with territory and federal authorities, utilities, regulators, emergency services and security stakeholders.

Precinct model

To address those constraints, TBH proposed an integrated utility precinct model that would plan power, water, cooling, connectivity and other enabling infrastructure together across designated areas. The report says that approach would give operators more certainty and reduce exposure to fragmented infrastructure planning.

It also argues that a precinct approach could give the Federal Government greater confidence that sovereign cloud and secure data systems are supported by resilient physical assets. For the ACT Government, the model would create a clearer basis for directing investment towards sites where land use, utility connections and community considerations can be managed together.

The report places Canberra's opportunity in a national context shaped by sovereign hosting requirements and continued growth in AI-related computing demand. It suggests the territory's next phase of data centre development will depend less on headline demand and more on whether land, power and utility planning can keep pace with the needs of large facilities.

Canberra was home to Australia's first data centre in 2007, but future growth will depend on choices about enabling infrastructure rather than existing credentials alone, TBH says.