NSW is building a storage pipeline for data centres, not a power supply
Data centres need continuous, reliable electricity to power the GPU compute and associated cooling.
But where is this generation going to come from?
Let’s examine the National Electricity Market generation pipeline, focusing on NSW where the majority of data centre developments are seeking connection.
The NSW Government is endorsing 15 data centre projects valued at $51.9 billion through its Investment Delivery Authority housed in the Premier’s Department, promising data centre developers an accelerated experience through the planning system.
The Australian Energy Market Operator, has a legislated requirement to publish a quarterly report which tracks the status of generation and storage projects in the National Electricity Market. It focuses on providing a ‘commitment status’ of NEM generation, breaking down ‘commitment’ into:
Publicly announced: projects that have been announced publicly and are not yet sufficiently progressed to be considered Anticipated or Committed
Anticipated: generation projects that are sufficiently progressed towards meeting at least 3 of the 5 commitment criteria
Committed: Projects with known timing and satisfy the five commitment criteria
In commissioning: projects that have successfully completed hold point testing
In service: production units that have fully completed commissioning as signed off by AEMO.
The commitment criteria is defined as: the project proponent has obtained land, contracts, planning, finance and a pathway for construction.
This all sounds very logical and prudent but when I audited the list, the dataset was at best a rough estimate against the proposed commitment criteria and could not be relied upon beyond a high-level status overview.
Instead, what would be a far more useful task is to follow the money, specifically, connection enquiry status.
Each project begins by lodging a connection enquiry with the TNSP and AEMO as per NER 5.3.2. Minimal money committed, really a signal of intent.
Next, should the project then move to a connection application (NER 5.3.4), this demonstrates a very strong signal with capital committed, technical modelling and feasibility studies commenced.
Then, should it proceed from connection application to connection agreement, it undergoes hold point testing and commissioning before it is energised, and electrons begin to flow.
Here is the real picture, focusing just on NSW – the most important data centre market in Australia.
There are 65 projects with a total ~16,526MW capacity at the connection application stage before the TNSP.
Of the 65 projects:
35 are standalone BESS projects
8 are hybrid solar and BESS projects
6 are wind farm projects
14 solar farm projects
1 gas project
1 advanced compressed-air project
So what does this mean?
Looking at the technology being deployed, this is not a generation pipeline for NSW. It is a storage pipeline.
35 of the 65 projects are standalone batteries and another 7 pair batteries with solar.
Storage does not create energy, it moves it. A battery charges when generation is cheap and discharges when it is not. It firms the grid, adding nothing to the annual pool of electricity the grid can actually supply.
And the storage in this queue is short duration, sitting predominately between 2 to 4 hours.
Now layer on what a data centre is: flat load that runs every hour of every day.
New load of that shape has to be met by new energy, which creates two inconvenient challenges – the queue is intermittent generation, and any new solar and wind projects that want to progress to connection application stage will take anywhere between 4-10 years to be approved by government (Herbert Smith Freehills Kramer, November 2025).
So for data centres developers and investors sweating the existing transmission network which offers a credible pipeline of BESS, solar hybrids, and standalone wind and solar projects is only going to stack up for so long.
Next instalment will explore what assets and corridors are likely to re-rate when this timeline is priced in.