When energy provider Jemena announced on Wednesday that it had paused the installation of new 22-metre-tall concrete power poles needed for a nearby data centre, it triggered a chain reaction.
One of the country's biggest data centre operators, NEXTDC — which was forced to delay a planned expansion of its M3 data centre in West Footscray, Melbourne — quickly saw its market valuation drop by around $3 billion.
The plunge was equivalent to about 42 per cent of the company's value, which could send fears through a surging sector still reeling from the failed float of one of its other biggest players.
Luke Laretive, CEO of Seneca Financial Solutions, said fear of "a significant downgrade" to NEXTDC's future earnings and a "contagion-type vibe" had spooked the share market.
"Are [data centre operators] going to be in a position now where ... despite having insatiable demand, they're unable to actually build these facilities in locations that have access to power, water, a community that's happy to have them nearby and are still close enough to the businesses and the people that want to use them?" the investment adviser pondered to SBS' On The Money.
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Some of the community around NEXTDC's West Footscray facility seemingly aren't happy to have it nearby. Local residents have previously expressed fears about the amount of diesel stored on the site and raised concerns about noise pollution.
The installation of the power poles required to meet the facility's significant electricity needs has also sparked community anger, with some residents of a nearby suburb using their cars and bins to block equipment deployed for the electricity network upgrade in September.
"Has NEXTDC lost its social licence to operate here, or have data centre providers more generally lost their social licence to operate?" Laretive questioned.
Less than two weeks earlier, data centre operator Firmus Technologies withdrew its application for public listing on the Australian Stock Exchange (ASX) — a move that had been touted as the biggest since Telstra's 1997 float on the ASX.
Firmus Technologies operates a data centre in Melbourne and is currently building another in Tasmania, with plans for at least two more — despite facing some community backlash.
A month before cancelling its public listing, Firmus announced several-year sponsorship deals with the Tasmania Devils AFL teams, Cricket Tasmania, and Tasmania JackJumpers and Jewels basketball teams, raising concerns of 'sportswashing'.
Olivia Shen, director of strategic technologies at the University of Sydney's United States Studies Centre (USSC), thinks the social licence for data centres could be in the process of being lost across Australia.
"The build-out has been incredibly fast and incredibly rapid," she said.
"And I think at the local level, communities are just feeling quite blindsided by all this development, and especially where it's happening on very large scale in areas where they're not used to this kind of development."
This sentiment conflicts with government messaging that, according to Shen, is more focused on a "narrative that these data centres are incredibly important public facilities for AI development".
That narrative may not be cutting through, with the USSC's 2025 annual poll finding that 67 per cent of Australians "want to prioritise the regulation of AI even at the cost of innovation".
"These Australians are basically saying that even if it slows innovation, we want to progress at a bit of a slower pace rather than having these technologies being shoved down our throats and being told that they're actually good for us," she said.
However, Shen said people should be careful in making broad generalisations about the entire industry.
"Not all data centres are the same, not all of the technologies they use are the same from one operator to another, and the impact on the community really, really depends on the local conditions of that community," she said.
A data centre reliant on a polluting energy plant planning to build next to rural farmland used for cattle production will have a different impact to one hoping to build in a quiet suburb in the city.
Laretive, meanwhile, suggests data centre operators "learn from the likes of the BHP's and the Rio [Tinto]'s of the world" for community engagement.
"They are a real participant in the community, and they're not just there kind of soaking up resources," he said, referencing jobs created by mining companies.
The Western Downs Digital Park is a $32 billion proposed data centre in Queensland. AI giant Anthropic signed a lease for the first of four planned buildings, but the site has not yet received approval.
Luke Munn, an ARC Future Fellow with the University of Queensland, and Joanna Horton, a postdoctoral research fellow, are studying the proposed site.
"I think what we've seen in the last couple of years is a kind of increasing recognition from the public that there's an infrastructure and a material footprint around the AI boom," Munn said.
Horton said the community have been "really pushing back against the proposed development".
A petition to stop the project already has 23,496 signatures — the most support for any active e-petition on the Queensland Parliament website.
"It has been a hotspot for gas extraction, which has been a really big 'boom and bust' industry for the region," she said.
It's left residents concerned about history repeating, with new jobs being created only to disappear before too long. Another concern is natural resource extraction and water use, which critics have said could have a significant impact on the drought-prone region.
Horton said locals are also taking action, with the Environmental Defenders Office, a non-profit community legal centre, reporting a 250 per cent increase in inquiries related to data centres since January of this year.
"I think that shows that all over Australia really are seeing data centres as a) something that they're not sure about that they have very real concerns about, and then b) something that they actually want to take action and push back on," she said.
Munn added that some companies now saw potential community opposition as a more important factor than geography or energy supply when choosing potential sites for data centres.
Shen doesn't think challenges faced by companies like Firmus are necessarily a sign that Australia's data centre boom is over, but she sees it as a warning that not every data centre company will see its investment pay off.
"There are firms jumping on this data centre bandwagon that are probably not going to be the best firms," she said.
"This is complex physical and digital infrastructure, and I don't think every single investor in a data centre is necessarily going to make their money back."
She says it could be a good thing if it encourages "more level-headedness with people investing in the right places".
Laretive said the NEXTDC case likely doesn't say too much about the demand for AI, but he still urges caution for investors.
"We need to be careful about evaluations and the amount of the future that we price into today's numbers and today's market capitalisation."
