At a glance
New South Wales published its data centre guidelines on 17 August, and a project that meets the performance measures gets a commitment that the state will finish its assessment in 75 days.
The energy condition is a ten-year contract for renewable projects that have not yet taken a final investment decision, at least 40% of it wind, with storage attached.
A data centre's contracted supply has to cover its own average demand from the fourth year of operation, a narrower test than the offset-and-surplus the Treasurer described.
Cooling that uses a lot of water has to run on recycled water, or the operator needs a signed plan with the utility to get there.
Meeting the guidelines is optional, and a project that skips them keeps the ordinary planning pathway and loses the 75-day commitment.
NSW put a 75-day clock on data centre approvals
The New South Wales government published the NSW Data Centre Guidelines and the policy framework around them on Monday 17 August. A project that meets the performance measures gets a commitment that its development application will take no longer than 75 days in state government hands, and that the planning department will issue its assessment requirements within two months of being asked. For scale, the state's Investment Delivery Authority took 12 months to approve CDC's 504MW Marsden Park campus. The 75 days covers a narrower stretch, the development application while it sits with the state, and it is the concession on offer.
The government counts 19 projects worth A$50.3 billion in the state significant development pipeline as at July 2026, meaning proposals large enough that the planning minister or the Independent Planning Commission decides them, and more than 60 data centres already operating or under construction. Energy Minister Penny Sharpe said the sector could account for 11% of the state's energy use by 2030. The guidelines answer the five principles NSW put out for public comment in March and attach a published set of conditions to that pipeline.
Treasurer Daniel Mookhey said data centres need to "bring additional power and additional water to offset their demand, but also to pick up some of the slack that otherwise would fall to households". AAP reported the requirement as a full offset of power and water needs after four years of operation, before adding extra capacity to water and power reserves. The guidelines require something narrower than a surplus: from the fourth year of operation, a site's contracted energy supply has to equal its annual average demand, under ten-year agreements with generation and storage projects that have not yet taken a final investment decision. The supply comes out of projects still to be built, and a proponent that does not want the arrangement can decline it and use the ordinary planning pathway.
The guidelines ask applicants to show whether they comply
Three pieces make up the framework. The first is the guidelines themselves, six performance principles with measures under each, which shape a planning assessment without being law. The second is regulatory reform to recover the cost of energy infrastructure from the parties creating the need for it. The third is a review by the Independent Pricing and Regulatory Tribunal, IPART, of how water pricing "can appropriately reflect the costs associated with servicing data centres while supporting continued investment and growth".
The Department of Planning, Housing and Infrastructure will run a data centre concierge function and offer pre-assessment support before a proponent has settled on a site. The guidelines then say that "applicants submitting data centre applications will need to demonstrate whether they comply with the Guidelines in their assessments", and the obligations bind once approval is granted: "conditions will then require applicants to meet obligations, mitigation measures and commitments outlined in their Environmental Impact Statement", monitored under existing departmental compliance programs.
Data Centres Australia chief executive Belinda Dennett said the guidelines "set a high bar, and we welcome that it is matched by real incentives to meet it", and the industry body welcomed the retention of alternative planning pathways for projects that cannot meet every measure. Katie Stevenson, executive director of Property Council NSW, said the framework gives "investors clearer rules, communities greater confidence, and government a more coordinated way to plan". Liberal MP James Griffin said that with more than 60 data centres operating or being built, "this framework is far too long overdue". Ben McLeod of the Climate Council said all states and territories "should get on board with similar rules under the proposed national guidelines".
The energy measure sets ten-year contracts for new wind and storage
Performance Measure 13 carries the energy obligation, under the principle that data centres fund additional supply of water and energy.
Requirement | What the guidelines specify |
|---|---|
Instrument | Power purchase and firming agreements, which cover the shortfall when wind and solar are not running, for additional renewable generation in New South Wales |
Wind share | A minimum 40% wind generation component, measured in MWh |
Storage | Battery or pumped hydro of at least 25% of generation capacity, for four hours, hybrid or separate |
Volume | From the fourth year of operation, contracted supply equals annual average demand and rises with ramp-up |
Contract length | Agreements of at least ten years |
Project stage | Energy projects that have not reached final investment decision at the time of contracting |
Structure | Portfolio or site-specific contracting, with operator and major tenant agreements combinable for co-location |
Source: NSW Data Centre Guidelines, Performance Measure 13, August 2026.
Measure 13 is written around contracted new build. A contract signed with a project that has already reached final investment decision does not qualify, and the guidelines set no volume for the first three years of operation. REGO certificates fill one gap: if a contracted project is delayed or cancelled for reasons outside the proponent's control, or supply and demand fall out of step in operation, certificates can stand in, provided they carry the measure's wind, storage and location components.
Energy ministers agreed on 28 July to progress in-state additionality rules, which require a data centre to bring new generation to the grid rather than draw on what is there, with every jurisdiction except Queensland and the Northern Territory behind it. New South Wales has attached a four-year ramp and a wind floor to its own version. AirTrunk argued in InnovationAus on 12 August for a phase-in of the additionality requirement, on the grounds that a campus takes about two years to deliver while major generation and transmission projects take five to ten or more.
Water-intensive cooling needs recycled water or a utility plan
A data centre using evaporative, adiabatic or open-loop cooling has to use recycled water for all of its cooling operations, or hold an agreement with its water utility to transition to a rainfall-independent supply. A site running on drinking water in the interim has to design for reduced use when drought restrictions are in force, and has to negotiate a plan with the utility to offset that interim use through funding agreements, efficiency programs or closed-loop systems.
IPART has been asked to review how water pricing reflects the cost of servicing data centres, and its finding sets the price a data centre pays for the supply these measures require. The framework describes that review in blunter terms than the tribunal has been given. Its third pillar reads "an IPART review to consider the full recovery of costs of water provision to data centre customers".
Efficiency measures set a design PUE of 1.25 or 1.3
Measure 1 offers two ways through. A project can design to a power usage effectiveness of 1.25 or better with water usage effectiveness at 1.0 litres per kilowatt hour for drinking water or 1.6 for other sources, or it can trade power efficiency for water and design to 1.3 with water usage effectiveness at 0.44, a figure the guidelines set without splitting it by source. Both are design figures, assessable at application stage before a site operates.
A project also has to demonstrate it can cut grid-supplied electricity by 25% of its forecast average load for up to two hours, and the Australian Energy Market Commission's advice, which energy ministers considered on 28 July, recommends connection arrangements that encourage data centres to shift demand. Two further measures require commercial arrangements with the energy and water utilities: one protects other customers if network assets built for a data centre end up unused, the other keeps the cost of water infrastructure off the wider customer base.
Consultation on who pays for network upgrades closes 14 September
The framework states that "the costs and risks of additional energy infrastructure required to support data centre growth are appropriately borne by those creating the need for investment, rather than existing consumers". Legislation amending the Electricity Infrastructure Investment Act 2020 was introduced in the New South Wales parliament on 5 August, letting the minister declare access schemes, which authorise or prohibit connection, over any connection capable of carrying 5MW or more. Consultation on the detailed implementation opened on 17 August and closes at 5pm on 14 September, with a departmental webinar on 24 August.
An Oxford Economics estimate cited by the government puts six of every seven megawatts of connection requests as possible phantom demand. Utilities separately told the government that only about 20% of the data centre applications in their connection pipelines were likely to proceed. Those are the speculative applications sitting behind the 9GW of data centre projects AEMO recorded in its transmission connection process at the end of June. Transgrid has asked for a rule change on connection capacity, which chief executive Brett Redman put as "new large users should pay for their full connection capacity, whether they use it or not". Distributors put a Victorian distribution connection at between A$20.5 million and A$86.8 million across nine scenarios, and the transmission layer where the largest campuses connect stays unresolved nationally.
What to watch
The energy consultation. Submissions on the network connection and cost recovery reforms close at 5pm on 14 September 2026. The guidelines leave who pays for shared upgrades to that consultation.
The parliamentary inquiry. The Legislative Council's Public Accountability and Works Committee, chaired by Greens MLC Abigail Boyd, is due to report on data centres by 30 September 2026. The guidelines were published six weeks ahead of that report.
The IPART water review. The tribunal reports on what data centres pay for water, and that is the open number in the framework.
The national rules. National Electricity Rule change requests on large-load visibility and cost recovery go back to energy ministers in September. Victoria, South Australia and Tasmania already carry dedicated data centre policies, and New South Wales has now added one to the group.
The first application through the pathway. The 75-day commitment covers the time an application spends in state government hands. The first project to test it will show what a ten-year contracting condition does to a financing timetable.