Plans for a $10 billion battery and an adjacent data centre in the Hunter are about to be lodged with the NSW government.
The Muswellbrook project, which is backed by an international technology and infrastructure consortium, will be one of the largest private investments in the state's history.
"This will be a massive win for the Hunter. We haven't seen anywhere near this level of investment before. If you think about it, a really big mining project might be worth $2 billion," Muswellbrook mayor Jeff Drayton said.
A scoping report for the project is due to be lodged with the NSW Department of Planning in the coming weeks.
The proposed two gigawatt battery, which will be more than twice the size of the Waratah Super Battery at Munmorah, will be the largest in Australia.
The attached data centres, which are expected to host information from some of the world's largest corporations including Google and Microsoft, will use about half of the energy stored in the battery.
It is proposed that the battery and data centre would become part of a larger industrial hub to be built on land owned by Malabar Resources between Denman and Muswellbrook.
Up to 500 people would be employed during the two to three-year construction phase. The finished project would employ about 200 people in highly skilled technology jobs.
Mr Drayton said the proponents, which are expected to be named in the coming weeks, had chosen the Upper Hunter because of strategic energy security.
"All of the energy from the western [Orana] and northern [New England] renewable energy zones has to come through substations at Bayswater and Sandy Creek Road," he said.
"They are going to build the battery and data centre next to those 500 kilovolt lines that will carry all of that energy and give them the security that they need.
"We need to get these renewable energy zones up and running so that new industries like these can go ahead."
Data centres will also feature as part of AGL's Liddell industrial hub on the site of the former power station.
A spokesman said the company was continuing to explore project options with potential partners.
"AGL is well positioned to support the rise in adoption of AI, and data centres remain a part of AGL's integrated hubs strategy," he said.
"There's potential to host data centres on the industrial sites of our decommissioned thermal power plants. These sites support jobs and regional economic renewal by offering brownfield industrial land, strong transmission access, significant water opportunities, and clear social licence."
Australian Bureau of Statistics figures released last week showed investment in data centres almost doubled in the first three months of 2026.
The result pushed business investment growth to 6.5 per cent over the three months to March, the fastest quarterly rate recorded since the peak of the mining boom in 2012.
A new Climate Council report released on Wednesday warns that the massive growth in Australian data centres could cripple the energy grid and cause power prices to increase by 26 per cent if it is not managed sustainably.
The report, Clouded future: Managing risks of the data centre boom, found clean energy was critical to Australia's future economic prosperity and security.
At the same time, Australia was emerging as a global data centre investment hotspot with 162 data centres already built and more than 90 projects in development.
The industry is already a significant energy user, and demand is expected to triple by 2030.
By then, the industry could comprise six per cent (12 terrawatt hours) of electricity demand, or enough to power all the homes in Victoria.
"Data centre energy demand has already nearly doubled in Victoria in the past year, and risen 18 per cent in NSW," the report says.
"If all proposed projects in Australia were to go ahead, their total maximum demand would be more than 21 GW - or more than seven times the capacity of Eraring, Australia's biggest coal- fired power station.
"Mega "hyperscale" data centre proposals are set to rival our largest industrial energy users. For example, the proposed 1.2 GW Mamre Road facility in NSW has a maximum capacity 25 per cent greater than the Tomago Aluminium Smelter."
The report warns that without strong rules, data centre demand will push up power prices and worsen climate risks.
"If data centre energy growth is matched with more gas, rather than renewables and storage, wholesale power prices will rise across Australia as high as 26 per cent in NSW and 23 per cent in Victoria by 2035," the report says.
"An impact on power bills is not inevitable. Matching new data centre load with additional, lower-cost renewables and storage would almost entirely avoid dumping extra costs onto households, other industries and businesses."
