The news, in brief
OpenAI and Australian data-centre operator NEXTDC have signed a memorandum of understanding to plan, develop and operate a next‑generation AI campus and GPU “supercluster” at NEXTDC’s S7 site in Eastern Creek, Western Sydney. The initial plan calls for up to 550MW of IT power at full build‑out, with OpenAI intending to be the initial offtaker as part of its new OpenAI for Australia program. Press coverage and government statements peg the total multi‑year investment around A$7 billion (≈US$4.6B). Subject to approvals, NEXTDC says the first phase is targeted for the second half of 2027. Reuters, OpenAI, Forbes, NEXTDC ASX update.
What makes it a “supercluster”
- Scale and site: S7 sits on a roughly 258,000 m² land parcel in Eastern Creek that NEXTDC agreed to buy in 2024 for about A$353 million. The campus is master‑planned for up to 550MW, placing it among Australia’s largest single‑site data‑centre builds. NEXTDC (S7 acquisition), Data Center Dynamics, Reuters.
- Sovereign compute: The partners frame S7 as sovereign AI infrastructure—designed to handle sensitive workloads across government, finance, research and critical industries—with OpenAI signaling it will take initial capacity and expand over time. OpenAI.
- Built for high‑density AI: NEXTDC says S7 will use closed‑loop, direct‑to‑chip liquid cooling for ultra‑dense GPU clusters and, critically for Australia, “will not require ongoing potable drinking water” for cooling. The facility will align to Australia’s Security of Critical Infrastructure (SOCI) framework. NEXTDC ASX update.
Project at a glance
| Item | Detail |
|---|---|
| Location | S7, Eastern Creek, Western Sydney |
| Planned capacity | Up to 550MW at full build‑out |
| | Status | MoU between OpenAI and NEXTDC; detailed contracts and financing still to come | | First‑phase target | 2H 2027 (subject to approvals)
| | Indicative investment | ≈A$7B (US$4.6B) over multiple years
| | Cooling | Closed‑loop liquid cooling; no ongoing potable water draw | | Governance | Designed to align with Australia’s SOCI framework |
Why Sydney, why now
Sydney already hosts one of the Southern Hemisphere’s densest clusters of data‑centre capacity, interconnected to cloud regions and financial markets. NSW’s government publicly welcomed OpenAI’s A$7B proposal as the first OpenAI for Countries initiative in Asia‑Pacific, arriving just as OpenAI formally launched its Australian program and opened a local office in the city. NSW Government, OpenAI, Forbes Australia.
Beyond infrastructure, OpenAI says it will roll out essential AI‑skills training to more than 1.2 million Australians through partnerships with CommBank, Coles and Wesfarmers—an unusually large workforce initiative that dovetails with the compute build‑out. OpenAI.
Timeline, financing and market reaction
This is an MoU, not a final investment decision. NEXTDC indicated “more information will be provided” as planning advances, and separately expanded its debt facilities to A$5.1B in mid‑2025 to support growth. The company’s shares jumped as much as 10.9% on the MoU news, underscoring investor appetite for AI‑tied capacity. NEXTDC, NEXTDC debt update, Reuters.
The engineering and sustainability challenge
S7’s design language reads like the new normal for AI factories: extreme‑density racks, liquid‑to‑chip cooling, and an explicit shift away from evaporative systems that consume drinking water—an increasingly hot topic in Australia. NEXTDC.
Still, power is the long pole in the tent. Analysts expect data‑centre electricity demand to roughly double by the end of the decade globally, and Australian reporting warns local data‑centre load could reach ~6% of national consumption by 2030 if growth continues—figures that put real pressure on grid upgrades and renewable build‑out. TechCrunch on JLL, The Guardian.
Policy and trust: the “sovereign” part
NEXTDC says S7 will align to Australia’s SOCI framework for critical infrastructure—a signal to public‑sector and regulated‑industry buyers that security, resilience and operational standards are designed in from day one. If you work in government or critical infrastructure, this matters for risk management programs, incident reporting and data‑sovereignty controls. NEXTDC, CISC SOCI guidance.
How it fits OpenAI’s global infrastructure push
OpenAI’s “for Countries” initiative pairs sovereign compute with local skills and startup programs. In Europe, “Stargate Norway” is slated to deliver 230MW in its first phase (with expansion ambitions to ~520MW), while the UAE was announced as an early international deployment. In that context, a 550MW Sydney campus would put Australia on the front line of the company’s larger infrastructure map. OpenAI for Countries, OpenAI (Stargate Norway), Reuters on Norway, OpenAI (Stargate UAE).
What to watch next
- Planning and environmental approvals in NSW, including community consultation and grid‑connection milestones.
- Long‑term power procurement (renewables + storage) and onsite backup strategy.
- Final commercial structure: beyond the MoU, how OpenAI’s offtake, financing partners and potential JV arrangements take shape.
- Build sequencing to 2027 and beyond—how fast high‑density liquid‑cooled AI halls arrive, and how they’re filled.
- Upskilling rollout: tracking whether the promised training for 1.2 million workers lands on time in 2026 and ties into productivity wins. OpenAI, NEXTDC.
Sources
- Reuters: Australia’s NEXTDC inks MoU with OpenAI to develop AI infrastructure in Sydney, shares jump (Dec 4–5, 2025)
- OpenAI: Introducing OpenAI for Australia (Dec 4, 2025)
- NEXTDC: Building the next generation of sovereign AI infrastructure in Australia (ASX announcement, Dec 5, 2025)
- Forbes: NextDC, OpenAI To Develop $4.6 Billion Data Center In Sydney (Dec 5, 2025)
- NEXTDC: S7 site acquisition announcement (Oct 17, 2024) and Data Center Dynamics coverage (Oct 18, 2024)
- NSW Government: Minns Labor Government welcomes OpenAI’s investment to NSW (Dec 5, 2025)
- TechCrunch (JLL): Data center power demand will double over the next five years (Jan 14, 2025)
- The Guardian: Datacentres demand huge amounts of electricity—could they derail Australia’s net zero ambitions? (Dec 3–4, 2025)
- CISC: Regulatory obligations under the SOCI Act (accessed Dec 5, 2025)
