Microsoft is gearing up for the artificial intelligence boom, securing construction approval for a $1.3 billion data centre in western Sydney. It is the company’s first major data centre in NSW to get council approval after earlier plans for a separate one were blocked.
Microsoft Australia boss Steve Worrall said getting council approval for the 190-megawatt data centre – based in Kemps Creek – was timely as local clients in both government and the private sector were looking more deeply into AI applications.
Land acknowledgment at Kemps Creek: the Dharug smoking ceremony at the data centre site. Edwina Pickles
“The demand signal is incredibly strong, hence the massive investment we’re making to build this data centre,” he told The Australian Financial Review.
The Kemps Creek approval comes months after Microsoft scrapped plans for a separate data centre at Lane Cove in Sydney’s lower north shore.
The tech giant had initially planned to build two major data centre sites in NSW, one in Kemps Creek and Lane Cove, but decided not to proceed with the latter site after the local council only allowed for a smaller facility.
As recently as last month, Evans and Partner technology analyst Paul Mason said in a note that the Kemps Creek data centre appeared to be struggling for approval. He said Australian players such as NextDC have historically been better than Microsoft at getting council approvals thanks to having more local knowledge on how to handle councils and the lead times associated with procuring utilities.
But with the Kemps Creek data centre going ahead, Mr Mason said it would be a boon for Microsoft – a cornerstone investor in ChatGPT creator OpenAI – as the tech giant was hungry for as much data capacity as possible.
An artist’s impression of the 190-megawatt data centre Microsoft is building in western Sydney’s Kemps Creek. 
“They’ve got a very large need for data centre space. In general terms, without getting approvals like this, it makes it a lot more difficult to deliver the services they’re trying to deliver to such as ChatGPT or its Copilot product,” he said.
“It’s becoming harder and harder for them to exclusively rely on outsourced operators. The scale of their requirements is getting big enough that that ends up being really difficult because the outsourced operators can only deliver so much at a time.”
In addition to Kemps Creek, Microsoft has received approvals to build a smaller data centre in Seven Hills and three others in Melbourne.
Mr Worrall said the Kemps Creek data centre received approval partly due to working closely with local councils and the Dharug people – traditional custodians of the land hosting the data centre – on its design.
The collaborative process took 18 months. The imagery and patterns incorporated in the design were created by Indigenous education technology company Indigital’s machine learning algorithm.
Indigital founder and Cabrogal woman Mikaela Jade said the designs went beyond creativity, and allowed the Dharug people to participate in the continued custodianship of the land together with Microsoft.
“[The process] infused cultural knowledge, language and law into the development of a data centre that’s on our country to make sure that it’s additive and not just another building being built on Dharug country,” she said.
The plants used in the site’s landscaping were chosen by Dharug people, who conducted a smoking ceremony to prepare for the new land use at the site on Thursday.
The announcement of the data centre’s Indigenous design follows the NSW government last week setting new standards in tendering by mandating ongoing consultation with local Aboriginal people over a new public square in western Sydney’s Bradfield City.
Construction of the Kemps Creek data centre will start in the coming months. Microsoft did not give a completion date.
Documents put the build cost at $332.6 million. A W Edwards is building the data centre within Mamre Road Precinct, the industrial park owned by Frasers local fund manager Altis Property Partners.
Updated: The story has been amended to reflect that the data centre will be built by AW Edwards. The original version of the story said the data centre would be built by Frasers.
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