At a glance
NEXTDC's M3 expansion is waiting on power lines that distributor Jemena must run on 15-metre poles through residential streets in Melbourne's inner west. Jemena paused that work in September 2026 after residents objected.
NEXTDC entered a trading halt on 19 October 2026 over a delay to power supply at M3.
Citi analysts Siraj Ahmed and Howard Suen said the delay likely relates to Jemena pausing work on the lines meant to supply M3.
Data Centres Australia says large load users including data centres pay 100% of their connection costs up front, and Jemena told the ABC the new poles fall within that scope.
The Australian Energy Regulator accepted Jemena's A$1.22 billion connections forecast in full in April 2026, which counts only data centre connections in flight or under a firm offer.
NEXTDC's Melbourne expansion is waiting on a row of power poles. To bring more electricity into M3, its West Footscray campus, distributor Jemena has to run 66,000-volt lines on 15-metre poles through residential streets, and it paused that work in September 2026 after residents objected. On 19 October 2026 NEXTDC halted its shares over a power delay at M3, and Citi says the paused poles are the likely cause.
M3 is operating and expanding, and the hold-up sits on the public streets outside it. This piece sets out what the analysts said, what happened on those streets, who pays for the works, and what the regulator has approved for Jemena's network.
Citi said the M3 delay "likely relates" to Jemena pausing work on electricity lines meant to deliver power to the site. NEXTDC's request to the ASX did not name a cause.
Jemena paused its 66,000-volt pole works in September
Jemena, the electricity distributor for Melbourne's north-west, has been replacing 7-metre wooden poles with 15-metre poles rated to carry up to 66,000 volts, the ABC's 7.30 reported on 27 September 2026. Residents in Yarraville and Spotswood told the program they had not been told about the works in advance.
Jemena paused the program in early September, Star Weekly reported, after concerns from residents of Yarraville, West Footscray and Tottenham. A spokesperson said the project had "raised genuine concerns within the community" and that the company had "paused the works program while we take stock, engage with stakeholders, and consider how we can improve our approach".
Jemena told 7.30 that augmenting the existing overhead network was "the most efficient and practical way to deliver the required electricity outcomes". University of Melbourne engineering professor Michael Brear told the ABC that the taller poles are "required mainly for safety reasons" at the higher voltages.
Large users pay 100% of connection costs up front, says industry body
Who pays for the poles was a recurring question in the coverage. Data Centres Australia, the industry body, says that under the National Electricity Rules, "large load users including data centres are required to pay 100 per cent up-front for their connection costs, including any augmentations required to connect their site to the network", 7.30 reported. Jemena told the program the upgraded poles fall within the scope of those augmentations.
In its April 2026 final decision on Jemena's network for 2026 to 2031, the Australian Energy Regulator accepted Jemena's connections forecast of A$1.22 billion in full, against A$967.8 million of forecast customer contributions across the network. The regulator listed connections among the drivers of the step up in Jemena's spending, after Jemena revised its forecast to include "only data centre connections that are currently in-flight or subject to a firm connection offer".
Item, 2026 to 2031 | Jemena forecast | Regulator's final decision |
|---|---|---|
Connections spending | A$1,221.9m | A$1,221.9m |
Customer contributions | A$977.1m | A$967.8m |
Net capital expenditure | A$1,338.5m | A$1,159.1m |
Source: Australian Energy Regulator, Jemena distribution determination 2026-31, final decision, Attachment 2, April 2026. Figures in 2025-26 dollars.
Jemena's west Melbourne supply area has more than eight data centre requests
The pressure on the network in the inner west is set out in Jemena's own planning documents. A regulatory test consultation published by Jemena and Powercor in August 2026 covers the 66,000-volt supply area fed from the Altona and Brooklyn terminal stations, which takes in Footscray, Yarraville, Tottenham and Spotswood. It says Jemena has received "more than eight recent major data-centre connection requests" in that area, and that "if only one of these data-centre connections proceeds to full load", the 66,000-volt network there "will have exceeded its full capacity". The preferred fix is a new transformer costing A$29.8 million, with an optimum timing of 2027-28. The document does not name NEXTDC or M3.
AusNet, which owns Victoria's transmission network, has said that demand from advanced data centre proposals in Victoria exceeds the state's existing capacity, Bloomberg reported. Bloomberg also reported that Jemena and Powercor warned in August 2026 that data centres in Melbourne's west were seeking more power than the grid could accommodate. Victoria's 50 operating data centres are concentrated around Melbourne's west, the ABC reported in September, as the Melbourne map shows, though the city's new campuses are spreading beyond it.
Citi's estimate for NEXTDC's FY27
In their note, reported by Bloomberg and Reuters, Citi analysts Siraj Ahmed and Howard Suen had assumed about 155MW of new billing in Victoria for NEXTDC in FY27, about 70MW of it from M3. They said it was likely that not all of M3's billing would be affected, and estimated about A$25 million of FY27 EBITDA could be at risk, according to Reuters.
NEXTDC guided in August to underlying EBITDA of A$385 million to A$410 million in FY27, with 197MW of its order book converting to billing, in its FY26 results presentation. M3 had 60MW built and 165MW in progress at 30 June 2026. NEXTDC was not available to comment to Bloomberg, and Jemena declined to answer questions because they related to its commercial relationship with a client.
What to watch
NEXTDC's announcement. NEXTDC expects to update the market by the open of trading on Wednesday 21 October 2026. It will show whether the company names the cause of the delay, how long it expects it to run, and whether it changes FY27 guidance.
Jemena's pole program. Jemena has not given a date for restarting the paused works. Any restart, or a change of route or design, will set the timing for supply to M3's next stages if Citi's reading is confirmed.
The Altona and Brooklyn transformer. Submissions on Jemena and Powercor's consultation closed on 18 September 2026. The final report will confirm the A$29.8 million upgrade and its timing.
NEXTDC's annual general meeting. NEXTDC holds its AGM on Friday 20 November 2026, its first shareholder meeting after the update.