Victoria Proposes Green Power Mandate for New Data Centres

Victoria has proposed that new data centres in the Australian state secure their own renewable energy supply and storage, as part of a sustainable development plan for the fast-growing sector.

The state's premier, Ben Carroll, announced the proposal on Tuesday and described it as the "strongest, clearest data centre rules in the country". Under the draft requirements, operators would also have to bear the cost of grid connections and network upgrades.

Analysts said the mandate effectively asks data centre developers to take on the role of power project developers, a capital-intensive shift that would extend project timelines. William Taylor, chief operating officer at ETFshares, noted that many of the largest hyperscale operators already hold dedicated renewable power purchase agreements as standard global practice, and said the state's move could formalise that approach. He added that the heaviest cost burden would likely fall on mid-tier operators without the balance sheet to fund dedicated generation alongside a data centre.

The proposed rules would bar construction in residential zones, near schools and childcare centres, and in rural areas unable to support the necessary infrastructure. Operators would also be made responsible for managing traffic during both construction and operation of facilities that power artificial intelligence growth.

Cooling systems would have to rely on recycled or non-drinking water. Data centres in Victoria currently account for less than 1% of the state's drinking water use for cooling, according to a government statement. The measures come as energy demand from the sector rises rapidly and communities across Australia push back against its strain on land, water and power resources.

NEXTDC, AirTrunk and CDC are among the major data centre operators in the state. The rules form part of the Victorian government's Sustainable Data Centre Action Plan, which sets out expectations for development across planning, water, environment and energy, along with how the government will coordinate support.

Australia's federal government has previously pledged to impose restrictions on data centre resource use from 2027, even as it courts an investment boom that economists estimate could reach A$150 billion ($106.53 billion) in the country by 2030.