NSW Regulator Demands Goodman Prove Renewables for $5.5bn Project Atlas AI Campus

Why NSW Energy Officials Are Questioning Project Atlas

Goodman Group's planned Project Atlas campus in Western Sydney — a 500-megawatt AI data centre expected to cost more than $5 billion — has hit an approval hurdle over electricity supply. In planning documents released in late July, the NSW Department of Climate Change, Energy, the Environment and Water asked the ASX-listed property group to demonstrate how the facility would draw power without extending the life of coal-fired generators or crowding out nearby households and businesses.

The regulator's core concern is that the heavy, round-the-clock computing loads in data centres add major new demand to the grid. DCCEEW said those facilities could prolong the operation of coal-fired power stations and needs to be offset through new renewable supply, including long-duration and firmed power purchase agreements. The department has asked Goodman to explain where Project Atlas will get its electricity, how it will operate when wind and solar output fall, and whether it can help finance new green energy generation.

Goodman has committed to using 100 per cent renewable electricity for its own operations, but its planning documents do not extend that promise to the AI workloads of its tenants, which are expected to use more than three times as much power as Goodman's own operations. The development is being assessed as NSW prepares its first comprehensive data centre policy framework, and the Commonwealth has flagged national rules from early next year requiring data centre builders to become net energy providers and manage water use.

What the Renewable Power Push Means for Goodman and the Data Centre Boom

Goodman's Own Renewables Promise Leaves the Big Load Uncovered

The distinction between Goodman's own electricity use and its customers' AI workloads is now the central approval issue. Goodman says its own operations will be renewably powered, but the facility's real energy draw is the computing infrastructure operated for cloud and AI customers. The department has asked Goodman to verify the power sources of those customers, not just its own meters. Since AI data centres of this size are being built for hyperscale tenants such as Microsoft and Anthropic, the eventual tenants' power contracts and renewable credentials will matter to planners.

NSW Is Using the Planning Process to Set a Renewable Standard

The agency is not simply asking for more documentation; it is setting expectations that new data centre capacity should come with new, dispatchable renewable supply in NSW. The request for long-duration, firmed PPAs points to a requirement that data centre developers support generation and storage that can deliver power when the sun is not shining and the wind is not blowing. It also asked Transgrid to show Project Atlas's demand will not block supply to nearby consumers, including NextDC's 612MW Western Sydney campus, which is targeting operations next year.

The Data Centre Boom Is Colliding with Coal Retirement

Australia's data centre capacity is forecast to more than double from roughly 1.5GW to 3.2GW by 2030. Large campuses such as Project Atlas are a major source of that growth. Without additional renewable and firming capacity, that demand makes it harder to retire coal plants on schedule. The planning condition being contemplated would shift some of that system cost onto data centre developers, rather than letting the broader grid absorb it. Goodman is already looking at renewable projects that have not yet reached financial investment decision, according to a person close to the project.

State and Federal Rules Are Converging on the Same Demands

NSW has been developing its first dedicated data centre policy framework since March, and a government spokesperson said planning controls should ensure data centres deliver the water and power infrastructure they need. At the federal level, Prime Minister Anthony Albanese has said the Commonwealth will legislate early next year to require data centre builders to provide their own energy and mitigate water use. That gives a clear signal that the conditions raised in Project Atlas are likely to become standard for future mega-projects, not a one-off hurdle for Goodman.

Next Moves for Goodman, Rival Operators and Energy Investors

• Goodman's approval team should prepare a firmed renewable energy plan for Project Atlas that matches the 500MW load and covers tenant workloads projected to be more than three times its own use. DCCEEW has already asked for long-duration, firmed PPAs, so evidence of dispatchable supply after dark or in calm weather is the likely condition.
• Data centre developers with NSW projects should factor in DCCEEW's request for Transgrid evidence that new demand will not block supply to nearby users. NextDC's 612MW campus is already part of the same local grid, raising the bar for later entrants.
• Renewable energy developers and investors can expect data centre operators to bid for pre-FID wind, solar and storage projects, since Goodman is already investigating renewable assets that have not yet secured financial investment backing.
• Equity and credit investors in Goodman Group should track whether the Department of Planning, Housing and Infrastructure accepts or modifies Project Atlas after DCCEEW's advice, and the state's promised details of its first comprehensive data centre policy framework.
• Hyperscale AI tenants such as Microsoft and Anthropic may face more scrutiny over their own power sources because Goodman's planning documents stop short of guaranteeing renewable supply for customer workloads.
• All local operators should prepare for federal rules from early next year requiring data centre builders to be net energy providers and mitigate water use, because Albanese has flagged those obligations alongside national AI standards.