NextDC slashes 2027 forecast on power grid delays
NextDC shares plunged over 40% after cutting its 2027 revenue and EBITDA forecasts due to power grid delays at its Melbourne M3 data centre, wiping A$3.1 billion from its market value.
NextDC slashed its 2027 net revenue forecast to A$475-500 million and underlying EBITDA to A$245-265 million. This is down from previous ranges of A$615-640 million and A$385-410 million respectively. The drastic cut follows power supply delays at its Melbourne M3 facility, which have pushed roughly A$140 million of contracted customer revenue into fiscal 2028.
Market Impact and Capital Allocation
The stock plunged 44% to A$53.5, erasing A$3.1 billion in market value. NextDC has paused all new development projects and land acquisitions for the foreseeable future. The company also cut its capital expenditure guidance for fiscal 2027.
NextDC reported A$8.7 billion of liquidity at 30 September, including A$1.275 billion in cash and A$6.7 billion of undrawn senior debt facilities. The board is expected to announce capital recycling options, including possible sales of selected development sites, by November 20.
Power Grid Delays at M3 Facility
Delays in power grid upgrades at NextDC's Melbourne M3 data centre are the core issue. Jemena Electricity Networks suspended work on the M3 power supply upgrade due to community and stakeholder opposition. Jemena does not expect to resume work before February 2027. Consequently, the next increase in electricity supply to the 225MW M3 campus is now expected in 2028.
The revised guidance strips out the affected M3 contracts entirely. This includes capacity already billing, because existing grid supply cannot be relied on to support the full contracted power ramp. Analysts note power availability, rather than demand, is emerging as the binding constraint on when contracted AI capacity can be energised and billed. Craig Scroggie, NextDC's CEO, explained the strategic shift: "With M3 revenue deferred, we have paused projects not backed by customer contracts and put that capital behind the capacity our customers have already contracted."
Operational Context and Wider Risks
The M3 facility is one of 17 data centres NextDC operates in Australia, with another nine in development or planning. The expansion of the West Footscray campus faces a second delay. A permit application for M3 Stages 6 and 7 will not be decided until 2027, pushed back due to Victoria’s state election on 28 November. The state has also proposed requiring a 150-metre buffer between new data centres and homes.
Analyst Tom Beadle at RBC Capital Markets said community concerns about data centre developments pose a genuine risk to contracted capacity timing. The incident highlights a sector-wide vulnerability. Goodman Group recently abandoned its A$798 million Project Mars data centre in Sydney’s Lane Cove after significant public opposition.
Despite the setback, NextDC posted record fiscal 2026 results with net revenue up 16 percent to A$405 million. Contracted utilisation jumped 202 percent to 740.1MW. The company is also building its first Japanese facility, TK1 Tokyo, a 28MW AI-ready campus with operational readiness targeted for late 2030. The federal government is finalizing national investment standards, with Treasurer Jim Chalmers stating it welcomes data centre investment if aligned with national interest. Investors now await the board's announcement on capital recycling options by November 20.
