Sydney may not have felt the full fury of the severe storm predicted for Wednesday evening but the heavy rain and damaging winds wreaked havoc from the lower Blue Mountains to the heart of the city.

More than 20mm of rain was dumped in the CBD in just over half an hour from 6pm. Horsley Park received 43mm of rain and Olympic Park collected 34mm.

Flights to and from Sydney airport were delayed for hours and the State Emergency Services responded to more than 400 jobs across the city as the storm swept in from the west, shredding trees, ripping out power cables and causing flooding.

Distress calls were fielded from suburbs including Newtown, Neutral Bay, Elizabeth Bay, Woollahra and Arncliffe. More than three-quarters of the NSW Fire and Rescue Service emergency fleet were in action for much of the evening.

"Between 5 and 8pm, we responded to hundreds of incidents across the city including numerous reports of lightning strikes to structures and trees across the city," a spokesman said.

Lightning strikes caused some small blackouts across the city and electrical fires in Neutral Bay and Pyrmont, where an electrical substation billowed fuel-laden black smoke as it burned for more than an hour.

Residents in densely-populated Pyrmont poured out of their apartment blocks after a loud crack of lightning hit the substation, cutting the area's power and unleashing a scorched mechanical smell.

"There were police cars everywhere. I dodged through some barricades and watched it burn with my neighbours. There was a lot of smoke and it went up for metres into the air," resident Rebecca Holgate told Fairfax Media.

More than 20 firefighters and four fire engines arrived as it blazed. They focused their attention on dousing the neighbouring apartment block while they waited for the substation to burn out. The 25 units in the closest block were evacuated and some sustained significant smoke damage.

There was also flooding in commercial properties such as Greenfield Shopping Village, and stores in Springwood and Blaxland. There was also flooding in Ryde, Parramatta and Mittagong.

Traffic jams sprung up around the city as the wind and falling power lines took out traffic lights at Richmond, Springwood and Penrith while flooding caused closures and delays on major arterial roads including the Cumberland Highway and the M4.

A severe thunderstorm warning was issued earlier on Wednesday, and was cancelled at 6.50pm as the worst of the storm passed.

The Bureau of Meteorology has predicted thunderstorms for Thursday night, with 3 to 15mm of rain. Temperatures are expected to remain above 20 degrees until Sunday.