Data centre setback compounds Australia's AI investment challenges

This postponement is another in a series of reversals signalling growing execution risk in Australia's and the world's data centre industry. Permitting processes, power availability and community pushback are all dragging out project timelines. Public companies and property groups such as NextDC and Goodman have already scaled back or pushed back ventures this year. The regulatory pause on a project in a very thinly populated area reveals that remoteness does not circumvent the obstacles. Protracted approvals push revenue further into the future for developers and may drag on valuations that depend on swift AI-led expansion. The delay also creates headwinds for Northern Territory gas producers, who increasingly count on data centre demand.

Even a cattle station almost 700 km from the nearest city cannot escape regulatory delays, as Australia's data centre pipeline runs into planning, power and social-licence obstacles, as well as populist grandstanding.

Key points of the article:

• Energy North, a startup, is no longer working towards the June 2028 start date for its 1 GW gas and solar data centre in the Northern Territory.
• The Northern Territory's regulator paused its seven-week deadline for setting assessment requirements, stating it needed to consult with the federal government, which is still forming data centre policy.
• The regulator listed 10 potential effects, including water system strain and disruption to Aboriginal sacred sites, and expressed low confidence that the proposed actions would manage them.
• Energy North stated it continues to be committed and will announce a timeline once the EIS terms are settled.
• This deferral follows NextDC's postponement of a Melbourne expansion due to energy supply worries and Goodman's termination of a Sydney project due to community opposition.

Reuters exclusively reported on Sunday that the company behind one of Australia's biggest proposed data centres is no longer aiming to begin by June 2028 after the Northern Territory environment regulator said it needed extra time to set the project's environmental requirements.

Project Ares, a 1 GW gas and solar data centre, was planned by startup Energy North on a cattle station nearly 700 km from any urban area, with a first power date of June 2028. On October 7, the territory's Environment Protection Authority paused its seven-week deadline to decide the assessment requirements, stating it would seek guidance from the federal government, which is still forming policy expectations for data centres and AI infrastructure. No new deadline was given.

Energy North informed Reuters that the 2028 date had always been indicative and it was no longer targeting that timeframe. The company said it will confirm timing after the regulator sets out the terms for an environmental impact statement. It did not disclose its financiers.

The regulator's ruling on the roughly 190 square kilometre campus, which would include gas turbines, a solar farm, an airstrip and housing for 4,300 construction workers, cited 10 possible impacts, from strain on water systems to disturbance of Aboriginal sacred sites. It added that it had low confidence the proposed measures would effectively manage significant effects.

This postponement is the biggest scheduling blow for an Australian data centre to date. It follows NextDC's decision this month to delay a Melbourne expansion over energy supply concerns and Goodman's withdrawal of a Sydney project after resident opposition. An urban planner told Reuters that planning frameworks were not designed for such proposals and that community concern was increasingly affecting real projects.

The reversal undercuts the Northern Territory's argument that its vast, sparsely populated land and abundant sunshine make it a faster route for AI investment than Australia's cities. With the territory government reportedly in talks with 12 data centre-related projects, approval risk is becoming a central question for the sector's growth plans.

No data centre will be built here.