Local government leaders across New South Wales are demanding an immediate moratorium on data centre approvals, warns a parliamentary enquiry, as concerns mount over a $41 billion development pipeline threatening the state's utility grid.
Councils from Penrith to Ryde have urged the Minns government to freeze the fast-tracked projects until stringent regulations are established to protect residential power and water supplies.
The pushback follows a surge in "state-significant" developments, with 15 major projects recently accelerated. Local authorities argue these facilities, essential for the AI-driven economy, are becoming a "resource blockade" for housing.
In Pyrmont, developers claim that data centres are "enclosing the grid" by reserving massive power capacities, leaving residential projects to shoulder the costs of multi-million dollar infrastructure upgrades.
While NSW currently hosts over 90 centres, the Australian Energy Market Operator forecasts their grid consumption will more than double to 11% by 2030.
Ryde Council described the facilities as "resource-intensive yet low-employment", occupying strategic land while offering minimal permanent jobs.
In response, the City of Sydney is advocating for "grid-positive" mandates, requiring operators to invest directly in new renewable energy and battery storage.
While industry body Data Centres Australia maintains that developers already fund their connection costs and offset 70% of energy use, Planning Minister Paul Scully has begun consulting on new rules.
The proposed framework aims to ensure the tech sector pays its fair share, preventing the data boom from inflating household utility bills or stifling the state’s housing targets.