22OCT

Jemena halts power line to NEXTDC's M3

4 min read

16:40UTC

Jemena stopped work on the line to NEXTDC's West Footscray campus after local opposition, and NEXTDC cut its FY27 EBITDA guidance to A$245m-A$265m.

← Back to Stalled power line cuts A$140m from NEXTDC guidance Jump to analysis ↓

IndustryAssessed

Key takeaway

One delayed local power line cut NEXTDC's earnings guidance by more than a third.

Jemena, the electricity distributor for western Melbourne, has halted work on the power line to NEXTDC's M3 data centre at West Footscray. NEXTDC told the ASX on 21 October that Jemena cited "safety concerns and lack of access to work sites arising from community and stakeholder opposition to the works"⁠¹. Jemena does not expect to restart before February 2027, and the council, as road authority, has not given consent while further consultation takes place.

NEXTDC, one of Australia's largest data-centre operators, now expects the first increase in grid supply to M3 in its 2028 financial year. Later increases depend on transformer projects at the Brooklyn Terminal Station, which are also delayed.

The company cut underlying EBITDA (earnings before interest, tax, depreciation and amortisation) guidance for its 2027 financial year to A$245m-A$265m from A$385m-A$410m, and net revenue to A$475m-A$500m from A$615m-A$640m. The new guidance excludes about A$140m each of revenue and EBITDA from the affected M3 contracts. Capital spending guidance drops to A$4.5bn-A$5.0bn from A$5.25bn-A$5.75bn, and every new development and land purchase is on hold "for the foreseeable future". The shares fell about 40% when trading resumed, ABC reported, after a halt NEXTDC requested on 19 October⁠².

The M3 contracts carry service-level credits, refunds owed to customers for late or unpowered capacity, and may give customers the right to terminate. NEXTDC is assessing whether force majeure, a clause excusing delays outside its control, applies⁠³. In August the company presented a 565.1 megawatt (MW) binding order book, of which 197 MW was due to start billing in the year to June 2027; some contracts inside that figure may now carry termination rights. The board will report on capital spending and a possible sale of development sites by its annual meeting on 20 November.

Victoria's planning decision on M3 stages 6 and 7 is not now expected until 2027, because caretaker conventions, which bar major decisions in the run-up to a vote, apply before the 28 November state election. The state already requires new data centres to bring their own renewable power.

Deep Analysis

In plain English

NEXTDC is an Australian company that runs data centres: large buildings full of computers that store and process data for other businesses. A data centre is useless without a big supply of electricity. In Melbourne, the company Jemena owns the local power lines. It was building a new line to NEXTDC's M3 site in West Footscray, but stopped because of local opposition to the works. It says it will not start again before February 2027. NEXTDC had promised space at M3 to paying customers. Without the extra power, it cannot deliver that space on time. So it has lowered its forecast of how much money it will make, and may owe customers refunds.

Deep Analysis

Root Causes

Power to an operating campus depends on three parties NEXTDC does not own: Jemena, which builds the distribution line; the council, which as road authority must consent to the works; and the transmission-side substation at Brooklyn. Contracts with customers were signed against a supply timetable that needed all three to hold.

Victoria's electoral calendar adds a second constraint. Caretaker conventions before the 28 November state election push the planning decision on M3 stages 6 and 7 into 2027, so the wire delay and the consent delay now run side by side rather than one after the other.

What could happen next?

Risk
Customers with M3 contracts may claim service-level credits or seek to terminate if force majeure does not apply.
Short term · Assessed
Consequence
NEXTDC may sell development sites; the board reports on this by its 20 November annual meeting.
Short term · Suggested
Precedent
Opposition to the distribution line, rather than to the data centre itself, has stopped supply to an operating campus.
Medium term · Assessed

Source Landscape

This story draws on neutral-leaning sources from United States

United States

Primary parallel: In the United States, large-power transformer lead times reached 36 to 48 months by May 2026, and only about 5 GW of the 12 GW of data-centre capacity announced for 2026 was under active construction. NEXTDC's later supply steps hang on the same component: the delayed transformer projects at Brooklyn Terminal Station.

Counter-parallel: Denmark's transmission operator Energinet froze new large-load connection agreements in March 2026 and extended the freeze in May. That stop was a grid operator's policy, which one decision could lift. At M3 the stop rests on council road consent and on access to work sites, neither of which NEXTDC controls.

The guidance cut is almost entirely M3. The EBITDA midpoint falls from A$397.5m to A$255m, a drop of A$142.5m, and the net revenue midpoint falls by A$140m; both match the roughly A$140m of M3 contract income now excluded. The rest of the business is guided at about the old level. The capital spending midpoint falls by A$750m, to A$4.75bn.

NEXTDC reported liquidity of A$8,675m at 30 September, so the halt is an earnings and contract problem before it is a funding one. The structural question is the land bank: the board will say by its 20 November annual meeting whether it sells development sites, which would turn idle land into cash while the grid catches up.

Consensus view: HSBC chief executive Georges Elhedery told lenders on 21 October to be selective on data-centre finance and to judge the quality of tenancy agreements, CNBC reported. The M3 contracts show the mechanism: service-level credits and possible termination rights make a signed customer only as firm as the power date behind it, and part of the 565.1 MW order book NEXTDC presented in August now carries that exposure.

Counter-view: NEXTDC's 21 October statement points to a legal way out rather than a commercial one. It is testing whether force majeure covers opposition to another company's works; if it does, the credits and termination rights may not bite, and the excluded M3 income becomes a deferral rather than a loss.

Key tension: Whether community objection to Jemena's line counts, under the customer contracts, as an event outside NEXTDC's control.

Sources:NEXTDC (ASX release via TradingView)·NEXTDC (ASX release via TradingView)·ABC News

Mentions:NEXTDC →Melbourne →Victoria (Australia) →Brooklyn Terminal Station →ASX →CNBC →Denmark →United States →Australia →HSBC →Jemena →Energinet →West Footscray →

First Reported In

Update #17 · Stalled power line cuts A$140m from NEXTDC guidance

NEXTDC (ASX release via TradingView)· 22 Oct 2026

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