The Victorian government has unveiled a new framework for data centre development that will require operators to secure their own renewable energy, meet stricter planning rules and contribute directly to the communities where facilities are built.
The Sustainable Data Centre Action Plan introduces new requirements covering electricity supply, water use, site selection, traffic management and local investment as Victoria prepares for continued growth in data centre infrastructure driven by cloud computing and artificial intelligence.
Premier Ben Carroll said the new rules, which the government described as the strongest introduced by any Australian state, are designed to ensure the sector can continue expanding without placing additional pressure on households, local infrastructure or Victoria’s electricity network.
Under the plan, new data centre operators will be required to bring their own renewable energy generation and storage capacity, with additional electricity demand matched by additional generation.
Operators will also be responsible for connection costs and any network upgrades required to support their facilities.
Water use will also face tighter controls, with operators expected to use recycled or non-drinking water for cooling wherever possible.
Where those alternatives are not immediately available, companies will be required to offset their water consumption and fund infrastructure upgrades needed to support their operations.
Planning restrictions will also determine where future facilities can be built.
New data centres will be prohibited in residential zones and near schools or childcare centres, while developments must maintain a minimum 150-metre buffer between data centre buildings and surrounding homes.
The government said developments would also be prevented in rural areas where existing infrastructure cannot adequately support their electricity, water or transport requirements.
Operators will be required to submit traffic management plans covering both construction and ongoing operations to reduce disruption to surrounding communities.
A new Local Investment Guarantee will form another major part of the framework, requiring data centre developers to provide measurable benefits to the communities hosting their facilities.
The government says the final requirements will be subject to consultation, but could include local employment opportunities, TAFE programmes, skills development and investment in parks or other community infrastructure.
Operators will also be required to work with local employment and training services and provide training opportunities for Victorians, linking future data centre investment with workforce development across the state.
The Victorian government said the data centre sector contributed $5.8 billion in capital expenditure to the state’s economy last year, highlighting the scale of investment already flowing into the industry.
“In Victoria, we set the rules – data centres must power themselves, protect homes and pay their way,” Carroll said.
“If we get that right, we can all share in their economic benefits, especially the local community.” he said.
The new requirements will apply to future developments and will not operate retrospectively, meaning data centre applications already being assessed will continue under the existing planning framework.
The government said the approach is intended to provide certainty for projects already in the pipeline while setting clearer expectations for future investment.
Victoria’s plan has also been designed to complement the Commonwealth’s national framework for data centres. In July, the federal government created an office focused on encouraging data centres to become net producers of energy while reducing pressure on water supplies.
The move follows similar policy changes in New South Wales, where the state government released the NSW Data Centre Policy Framework in August.
