At a glance
Victoria's Sustainable Data Centre Action Plan, announced on 22 September 2026, will require new data centres to source their own renewable energy and pay for their grid upgrades.
New sites will have to sit at least 150 metres from homes, outside residential areas and away from schools and childcare centres.
Cooling has to run on recycled or non-drinking water, and a developer that cannot switch straight away must offset the drinking water it uses.
How the state will enforce the rules is not yet clear, and some take longer to come into effect than others.
Premier Ben Carroll released the plan on 22 September 2026, a day after cabinet approved it, The Guardian reported. Carroll said data centres "must power themselves, protect homes and pay their way". The government first announced the Sustainable Data Centre Action Plan on 27 November 2025, under former Premier Jacinta Allan, with A$5.5 million to make Victoria Australia's data centre capital. Anthony Carbines, who took Victoria's new AI portfolio with data centres in its remit on 4 August, told the ABC that companies such as Amazon and Microsoft choose to invest in Victoria and "that will continue within sensible guardrails".
National Cabinet agreed on 26 August that the Commonwealth will develop mandatory standards for data centre energy, water and land use, to be legislated in early 2027. Developers build under existing state rules until then.
Victoria's plan will set state requirements on all three: new data centres bring their own renewables, cool with recycled or non-drinking water and sit at least 150 metres from homes. The government says the plan fits within the Commonwealth framework.
Three other states set their own data centre conditions
State and document | Energy | Water and siting |
|---|---|---|
Victoria, Sustainable Data Centre Action Plan, 22 September 2026 | Own renewables and storage; pay for connection and network upgrades | Recycled or non-drinking water; 150 metres from homes |
New South Wales, data centre guidelines, 17 August 2026 | Ten-year contract for renewables not yet at final investment decision, at least 40% wind, with storage | Recycled water for water-intensive cooling; optional, in return for a 75-day assessment |
Tasmania, draft Statement of Expectations, 7 September 2026 | Bring new renewable generation into the state; pay network and connection costs | Forecast water use; non-statutory |
Queensland, stated position, August 2026 | State to write its own rules | Community study and paid council agreement before a planning application, as proposed |
Source: Victorian Government, via ABC News and The Guardian; NSW data centre guidelines; Tasmanian Government; ABC News, August 2026.
Victoria, the NSW data centre guidelines and Tasmania's Statement of Expectations all ask developers to bring new renewable supply and pay for their grid connection. New South Wales makes its conditions optional in return for a 75-day assessment, and Tasmania's document has no force in law. Victoria's plan adds a fixed distance of 150 metres from homes, and its water rule covers every new data centre rather than only water-intensive cooling.
The build in each state is tracked in where Australia's data centre build stands, state by state, and the operators behind it in the directory of data centres in Australia. Each government's plan is compared in Australian data centre policy by state.
New data centres pay for their own power and grid upgrades
Developers will have to provide their own renewable energy and storage, either through their own programs or by investing in new generation, and pay for the energy infrastructure upgrades they need, the ABC reported. Data centre energy consumption in Victoria is set to quadruple by 2030, the ABC said.
Energy ministers agreed on 28 July that data centres should fund new renewables in the state that hosts them, and left the definition of "additional" for September. AirTrunk has argued that the national requirement should be phased in. Additional renewables also head the Climate Council's seven data centre rules.
The buffer is 150 metres from any home
New data centres will be banned from residential areas, from sites near schools and childcare centres and from rural areas that cannot support them, The Guardian reported. Buffer zones inside industrial zones will keep new data centres at least 150 metres from homes, the AFR reported. Existing noise limits and fire and safety rules continue to apply, and developers will need traffic management plans covering both construction and operation, The Age reported.
Under New South Wales rules, a whole site on a quiet street must stay under about 35 decibels at the nearest house, one of the limits that govern data centre noise in Australia. The proposed federal legislation would carry a minimum obligation to avoid inappropriate locations near homes, schools and prime agricultural land, Michelle Grattan reported in August.
Cooling moves to recycled or non-drinking water
The government says less than 1% of Victoria's drinking water goes to data centre cooling, and concedes the figure should be zero, the ABC reported. The plan will require recycled or non-drinking water. A developer that cannot meet that immediately will have to offset any drinking water it consumes, The Age reported.
AWS has already signed with Greater Western Water to cool a western Melbourne data centre on recycled water from day one. Victoria's Essential Services Commission approved Melbourne Water connection principles in June that recover costs from large users such as data centres, while New South Wales has asked IPART to design a framework for data centres to fund their own water.
Developers fund a local investment guarantee
New data centres will also have to give back through a "local investment guarantee", which could include jobs, TAFEs and parks, The Guardian reported. Those benefits remain subject to consultation, according to The Age. They will have to employ Victorians during construction and train people for long-term jobs once operating, and the plan includes "fair community consultation".
Canberra has been weighing a mandatory community benefit fund since July. Developers elsewhere have named voluntary figures, with IREN and Goodman offering community payments at Bundey and Lane Cove West.
What to watch
The plan document. Some rules can be made quickly by regulation and others will take longer, the ABC reported. The published text will settle how the buffer is measured, what counts as new generation and how the state enforces both.
The Senate hearing in Melbourne. The Senate inquiry into AI and data centres holds hearings in Melbourne on 23 September 2026 to hear community concerns.
The state election. Victorians vote on 28 November 2026, and the Greens have called for a moratorium on new data centres. Applications on the Development Facilitation Program are decided by the planning minister, the pathway under which NEXTDC had its A$1 billion Port Melbourne data centre approved in 75 days earlier in 2026.
The 2027 national standards. Projects approved before the Commonwealth legislates build under the rules as they stand. Victoria has 50 data centres operating, a further 10 approved for construction and eight under planning assessment, the AFR reported. The start date of each Victorian requirement decides which of those 18 projects it reaches.