How did the withdrawal happen?

The Sydney data centre debate has entered a new phase after the cancellation of a major project planned for the Lane Cove suburb. Goodman Group confirmed in a letter to the local planning authority that it had withdrawn its application for the data centre.

The company’s Project Mars had been designed as a facility with a budget of about A$1.2 billion and a capacity of 90 megawatts. It was due to be built about 20 metres from the nearest homes in Lane Cove.

During the planning consultation process, a total of 374 submissions were lodged, and only nine backed the project. The company said it had carried out technical reviews, stakeholder meetings and community consultations since the process began in March 2025, but had decided not to proceed because of changing conditions.

What were the main objections?

Residents raised concerns over location and infrastructure pressure

Local residents and campaign groups opposed the plan because the facility was to be built so close to homes. The objections also focused on the heavy water and electricity needs of data centres, as well as the pressure the project could place on neighbourhood life.

  • The project was planned about 20 metres from residential properties
  • Concerns over additional strain on water and energy infrastructure

Anthony Roberts, who represents Lane Cove in the New South Wales Legislative Assembly, said the decision was an important outcome for the area. While acknowledging the role of data centres, Roberts said projects on this scale should be planned in suitable locations with local communities in mind.

Why is the data centre debate growing in Australia?

AI investment is colliding with local concerns

Demand for data centres has risen sharply in recent years as generative artificial intelligence has become more widespread. Thanks to its clean energy capacity, natural gas reserves and land availability, Australia is seen as an attractive destination for global technology and AI companies.

At the same time, the water and electricity use of large data centres, along with their impact on local communities, has fuelled a growing debate in the country. Last month, the New South Wales government announced an accelerated program under which applications for projects that meet certain standards and help fund additional water and energy supply could be assessed within 75 days.

In its withdrawal decision, Goodman Group said the policy and regulatory framework for large-scale data centre projects had changed significantly. The company said those changes, together with local community feedback, led it to conclude that it would not move forward with the project.