Project Mars set off a war of words. Now the AI data centre is wiped off the face of earth

An industrial property giant’s plan for a hyperscale data centre on Sydney’s north shore has been abandoned after outrage among residents, in a case that has become a flashpoint for the spread of artificial intelligence infrastructure across the country.

Goodman Group had placed state-significant plans for the construction and 24/7 operation of an $800 million, 81-megawatt data centre on public exhibition in March, which would have required the demolition and excavation of four existing warehouses.

In a letter to the NSW government on Monday, Goodman’s head of planning Guy Smith confirmed it was withdrawing the application and cited “emerging federal and state policy” as among the reasons for abandoning the development.

“During this time, the policy and regulatory environment for large-scale data centre development has evolved significantly,” it said.

“Goodman has carefully considered these changes together with feedback received through the planning process, including the views of the local community.”

The proposal not only sparked backlash from residents: utility providers Sydney Water and Ausgrid were concerned the development would strain existing infrastructure and increase electrocution or fire risks.

Goodman Group was also asked about the proposal in federal parliament, but the appearance of senior leaders via audiovisual link was plagued by technical problems.

The 28-metre-tall “Project Mars” data centre would have been located within the Lane Cove West industrial area, which is bordered by a park, low-density homes 50 metres to the east, and Lane Cove West Public School about 160 metres north-east of the site.

In a letter to the planning department in May, Ausgrid raised issues about the compatibility of the data centre with existing infrastructure, requiring “due consideration be given … particularly in relation to risks of electrocution, fire risks”, citing other noise and visual amenity impacts.

Data centres are large, energy-intensive facilities requiring uninterrupted power and a constant supply of potable water to cool servers. At capacity, Goodman had anticipated Project Mars would have used about 35 litres of water per second during peak times and about 1.4 million litres per day.

Sydney Water said in a submission it was “unable to support progression” of the data centre without more detailed planning assessments of water demand and wastewater impacts. The state-owned corporation said Project Mars would have heaped pressure on the existing drinking water system, which in its view had “limited capacity to service the development”.

Both utility providers’ doubts illustrate a pattern of concerns that emerge when data centre developments outpace upgrades to critical infrastructure, strained by population growth and climate change. The global AI boom has boosted demand for data centres with greater capacity in Sydney: there are 41 state-significant projects across the city in the development pipeline, of which 18 have been approved.

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