NextDC’s Power Pole Problem: How a Suburban Dispute Wiped 40% Off a Data Centre Giant

The AI data centre boom has run into a very local problem: power poles in Melbourne’s inner west. NextDC cut its 2027 financial year guidance on Wednesday 21 October after electricity distributor Jemena suspended grid works needed to supply its M3 data centre in West Footscray, and its shares fell about 40%, the ABC reported.

What happened

In its ASX release, NextDC said Jemena suspended parts of the 66kV line works in September 2026 and has told the company it does not expect to restart them before February 2027. Jemena attributed the suspension to safety concerns and lack of access to work sites arising from community and stakeholder opposition, and to the local council not giving consent while further consultation takes place.

The ABC reported that residents in Yarraville had resisted the installation of 15-metre power poles in September, with some blocking crews by leaving cars and bins in the way.

NextDC now expects the next increase in grid supply to M3 during the 2028 financial year.

The financial hit

• FY27 net revenue guidance: $475 million to $500 million, down from $615 million to $640 million.
• FY27 underlying EBITDA guidance: $245 million to $265 million, down from $385 million to $410 million.
• FY27 capital expenditure guidance: $4.5 billion to $5.0 billion, down from $5.25 billion to $5.75 billion.

The revised guidance excludes the affected M3 contracts entirely. The company said its August guidance had included about $140 million of both net revenue and underlying EBITDA from those contracts, and that service level credits could push EBITDA below the new range.

“We have taken the affected M3 contracts out of FY27 guidance until we can reliably estimate their contribution,” chief executive Craig Scroggie said. “With M3 revenue deferred, we have paused projects not backed by customer contracts and put that capital behind the capacity our customers have already contracted.”

NextDC said it had about $8.7 billion of liquidity at 30 September, remains within its debt covenants, and will announce the outcome of a capital expenditure review by its annual general meeting on 20 November. It will also consider selling development sites not needed in the near term.

Planning and politics

A Victorian Government decision on a planning permit for M3 Stages 6 and 7 is now expected only after the state election on 28 November. The ABC reported that the Victorian Government has announced rules to keep new data centres away from homes and schools, including 150-metre buffer zones.

Group chief development officer Simon Cooper said the company was “exploring all avenues”, including moving or undergrounding the lines. “Undergrounding does take time and there’s not an immediate option that we can work on now. But it is something that we are absolutely considering,” he said.

On the same day, independent senator David Pocock proposed a 5% levy on large data centres in a National Press Club address, saying the federal government had been “starstruck” by US AI companies.

The lesson for investors

Data centres have been sold to investors as a story about demand from AI customers. NextDC’s update is a reminder that supply, meaning grid connections, planning approvals and community consent, can be just as decisive. For an industry planning tens of billions of dollars of investment, social licence is now a line item.

Sources: NextDC ASX release (21 October 2026); ABC News (21 October 2026).