A new report from Boston Consulting Group (BCG) has warned Australia is at a “critical inflection point” in its ability to capitalise on the global boom in AI-driven digital infrastructure, with the country at risk of missing out on more than $100 billion in economic activity without faster action on energy, planning and investment settings.
The report, Australia’s Digital Infrastructure Challenge: Can data centres unlock sustainable long-term growth?, found global demand for computing power is accelerating rapidly as generative AI adoption, cloud expansion and data growth continue to surge.
While global computing capacity is forecast to more than double by 2030, demand is still expected to outstrip supply.
According to BCG, Australia is already one of the largest data centre markets in the Asia-Pacific region, with about 1.8GW of installed capacity in 2025. Strong renewable energy resources, stable regulation and international connectivity have positioned the country to capture a larger share of future demand.
However, the report warned regional competitors are moving faster than Australia and competition across Asia-Pacific is intensifying, with markets including Singapore, Malaysia, India and Japan actively pursuing investment through policy coordination, incentives and streamlined approvals.
“Australia has an opportunity to capture the growing market opportunity both locally and globally,” said Chris Mattey, managing director and partner at Boston Consulting Group.
“But we’re reaching a point where challenges around power, approvals and infrastructure delivery are becoming more important in investment decisions. Investors are moving quickly, and continued progress on these issues will be important if Australia wants to capture its share of future growth.”
The analysis estimated an additional 2.5GW of data centre capacity by 2030 could generate more than $100 billion in domestic economic activity through construction and enabling energy infrastructure, alongside $10 billion annually in ongoing economic activity once facilities become operational.
The report also pointed to wider economic spillover effects across supply chains, regional economies and energy systems.
A major factor underpinning the opportunity is the changing nature of AI workloads. The report noted that many AI training and inference functions are increasingly “latency-tolerant”, allowing data centres to be built in locations with favourable energy and infrastructure conditions rather than close to major population centres.
That shift could create a significant opening for Australia to service broader Asia-Pacific demand over the next decade.
Despite those advantages, the report identified four major constraints threatening future growth.
The first was what it described as a “power paradox”, with governments, energy providers and technology companies needing to balance reliability, affordability, decarbonisation and rising AI-related electricity demand.
The second challenge centred on an investment “chicken-or-egg” problem, where developers are reluctant to commit capital without anchor customers, while hyperscalers require guaranteed power access and delivery timelines before signing contracts.
Fragmented planning systems and infrastructure “micro-decisions” were also identified as the third and fourth barriers, with more than 60 per cent of Australia’s data centre capacity currently concentrated in Sydney and Melbourne.
With all this in mind, the next 12 to 18 months will be pivotal for Australia’s long-term competitiveness in AI infrastructure.
“As hyperscalers and global investors prioritise speed, certainty and energy availability, delays in approvals, grid connections and infrastructure delivery could shift capital elsewhere,” the report stated.
It added that successfully scaling digital infrastructure would be critical to strengthening Australia’s economic resilience, sovereign capability and competitiveness in the AI era.
