The Pulse
Victoria orders new data centres to bring renewable power
Victoria will require new data centres to provide renewable energy and storage, protect homes and roads, use non-drinking water for cooling and deliver local benefits under a new state action plan.
AI.info Team ·
“In Victoria, we set the rules – data centres must power themselves, protect homes and pay their way.”
Ben Carroll, Premier of Victoria
Victoria will require new data centres to bring their own renewable electricity supply and storage under a state action plan released on Tuesday, September 22, 2026. Developers will also have to match new demand with new generation, meet connection costs and pay for network upgrades linked to their facilities.
The Sustainable Data Centre Action Plan sets requirements covering energy, water, planning and community benefits. The Victorian government says the policy is intended to support investment while preventing data centres from shifting their costs onto Victorian consumers.
New power must accompany new demand
Data centres use a large amount of electricity, and demand is rising. Under the new rules, facilities will bring their own renewable energy supply and storage. They will also be required to match the additional demand they create with new generation, while paying the cost of their electricity connections and any network upgrades they require.
The government says the rules are intended to prevent growth in data-centre demand from coming at the expense of Victorian consumers. The statement also links the policy to a broader goal that data centres should be “net generators not net users”, wording it attributes to the Prime Minister.
The plan describes data centres as infrastructure supporting banking, healthcare, transport and emergency services. The government says it is better for those facilities to be located in Victoria than overseas, provided they operate under state requirements covering energy, planning, water, employment and community benefits.
Water and siting rules add new limits
Data centres currently use less than 1 per cent of Victoria’s drinking water for cooling, according to the government. Under the new rules, they will be required to use recycled or other non-drinking water instead.
Facilities that cannot immediately meet the non-drinking-water requirement will have to offset the water they use and pay for infrastructure upgrades they need to reach the standard.
New data centres will be prohibited in residential zones. They will not be built near schools and childcare centres, or in rural areas that cannot support them. The government also says new facilities will need to maintain a clear separation from homes.
A 150-metre buffer will apply between a new data-centre building and homes. The government describes the distance as wider than the MCG and says it is intended to provide certainty for people living next to industrial zones.
New facilities will also need a responsible traffic-management plan covering construction and operation. The government says data centres generate relatively few truck movements once they are running, but the requirement is intended to prevent traffic from worsening.
Local fund links data centres to jobs and community projects
New data-centre developments will be required to deliver a Local Investment Guarantee. The government says the benefits, which will be subject to consultation, could include local jobs, TAFEs, parks and other projects.
The policy also requires data centres to train Victorians and hire where they build by working with local employment and training services. The government says every data centre supports hundreds of construction jobs, as well as skilled, long-term positions once facilities are operating.
The state says the data sector delivered $5.8 billion in capital expenditure into Victoria last year. It argues that investment can benefit communities that host data centres if the projects contribute directly through employment, training and local initiatives.
Existing rules and applications
The action plan supports the Commonwealth’s framework for data centres and operates alongside existing Victorian regulations. The government says projects will continue to be subject to noise, fire and safety requirements, as well as fair community consultation.
The new rules will not be retrospective for applications under assessment. The government also expects data centres to continue working with local communities and responding to residents’ concerns.
Minister for Artificial Intelligence and the Digital Economy Anthony Carbines said data centres support essential services and that companies such as Amazon and Microsoft would continue investing in Victoria within the new conditions.
“Data centres power our lives and support banking, healthcare, transport and emergency services”.
Anthony Carbines, Minister for Artificial Intelligence and the Digital Economy
Premier Ben Carroll said the government’s approach was designed to ensure Victoria shares in the economic benefits of data centres while requiring new facilities to provide their own energy supply, protect homes and contribute to the communities where they operate.