Connections still there to be data centre power

By the Editorial Team · Friday, October 23, 2026

Australia’s status as a competitive hub for global data centres remains strong despite the collapse of Firmus Technologies’ $7 billion IPO and power supply challenges faced by NextDC. With rising capacity constraints in North America and Europe, Australia’s stable infrastructure and geographic advantages position it as a key location for energy-intensive AI computing, though managing local community opposition and infrastructure issues will be crucial.

Australia’s prospects as a global data centre hub remain strong despite recent setbacks, according to a leading US-based energy economist. Margarita Patria of Charles River Associates highlighted the country’s competitive advantages for attracting data centre investments, citing its stable legal environment, low crime rates, reliable energy resources, and relative immunity from natural disasters.

Patria pointed out that while Australia’s local data centre sector experienced a blow with the aborted $7 billion initial public offering of Firmus Technologies, the nation’s longer-term potential remains intact. She noted that other key markets, including Canada and parts of Europe, are facing capacity constraints or regional limitations, making Australia an increasingly viable option for large-scale data centre operations.

“The US power grid is nearing its limits for accommodating domestic data centre demand,” Patria said. “Although capacity is being expanded, it cannot keep pace with the industry’s aggressive timelines. Canada and Mexico also have their own challenges. Europe’s data centres primarily serve their local populations.”

She emphasized that Australia’s geographic isolation need not be a hindrance, particularly for specific computing applications such as training large language models within artificial intelligence. These facilities require vast amounts of power concentrated in single locations but do not necessarily need to be close to end users, making Australia’s expansive land and stable power infrastructure an advantage.

Patria cautioned that while the sector is still emerging—many announced projects have yet to come online—the involvement of established firms signing binding agreements with major technology companies, or hyperscalers, is a critical indicator of genuine industry growth. At the same time, she noted concern about speculative entrants promising vast investments without substantive backing.

This week, Firmus Technologies signed a multi-year contract with Thinking Machines Lab, the AI company led by former OpenAI executive Mira Murati, to leverage Firmus’s infrastructure in Asia for AI model training and deployment. Firmus has also secured agreements with OpenAI for new sites in Malaysia and with Meta and Nvidia for facilities in Indonesia, underscoring its ongoing role in the regional data centre landscape despite the failed IPO.

In contrast, shares in local operator NextDC dropped sharply after the company disclosed power supply issues at its Footscray M3 facility in Melbourne, attributed to objections from community and local government groups. This development led NextDC to halt new development and land acquisitions and prompted a review of capital expenditure ahead of its November 20 annual meeting.

As the global data centre industry continues to evolve rapidly, Australia’s capacity to attract and support large-scale, energy-intensive operations remains a significant strategic opportunity, provided that infrastructure challenges and community concerns can be managed effectively.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.