Transgrid says Sydney basin is nearly full for data centres without new transmission works

Transgrid has told data centre connection applicants that it cannot offer capacity in the Sydney basin unless network augmentation is built alongside the connection. The message was in a letter dated 20 August 2026, headed as an update on network capacity and the connection pathway for data centres, and sent to proponents at the same time.

Enquiries representing more than 20 GW of data centre load have been lodged with Transgrid, which the letter describes as about double NSW's current peak demand. An earlier letter, dated 17 June 2026, confirmed signed connection agreements for approximately 1.5 GW of demand in Western Sydney, which Transgrid says its existing network can accommodate. After those commitments, the letter says, the transmission network in Western Sydney and the wider basin has limited remaining capacity for further large-scale connections, and more can only come from augmenting the network. Transgrid attributes this to the interconnected nature of the network, where new large loads in one area affect capacity across the broader system.

On the information currently available, Transgrid assesses that augmentation could unlock up to 2 GW of additional data centre capacity across the basin, and it said the figure will be refined as planning proceeds. At a minimum it expects a substation at South Creek, new transmission line capacity between South Creek and the Sydney West substation, works at Sydney West, and added dynamic and static compensation for voltage and reactive power support. Connections remote from those sites may need further augmentation to the point of connection.

Transgrid confirmed that, in line with recent Commonwealth and NSW regulatory reforms, the proponent creating the need for augmentation will bear the cost rather than electricity consumers more broadly. Costs will be shared where several proponents use the same works, while connection assets used by a single proponent remain payable in full by that proponent. The letter says the terms and costs of the works are subject to negotiation between Transgrid and proponents.

Transgrid intends to allocate new capacity through a market-led, first-to-commit approach across transmission and distribution networks, while maintaining system security and reliability. Capacity will count as committed only once a proponent signs a connection agreement on either network, and Transgrid said it has published a Network Capacity Allocation Policy explaining the approach. Given current interest, Transgrid assesses that the remaining capacity, including any unlocked by the augmentations, could be committed within the coming months.

The remaining-capacity figure makes no allowance for as-available or dynamic capacity connections. Transgrid said further work with AEMO and proponents is needed before such arrangements can be implemented with confidence, and it does not consider it appropriate to rely on them in allocating capacity until the operational framework is better understood. Its connections team can help applicants consider other options, including regional NSW locations such as the Hunter and Riverina, with more detail promised in the upcoming 2026 Transmission Annual Planning Report.