Victoria Proposes Stricter Rules for New Data Centres

The Australian state of Victoria has proposed a set of requirements for new data centres, including an obligation to secure their own renewable energy supply and storage. The plan, announced by Premier Ben Carroll on Tuesday, would also require operators to cover connection costs and network upgrades, and to use recycled or non-drinking water for cooling.

Under the proposal, data centres would be barred from residential zones and from locations near schools and childcare centres. Construction would also be restricted in rural areas unable to support the necessary infrastructure. Operators would additionally be responsible for managing traffic during both construction and operation.

Carroll described the measures as the "strongest, clearest data centre rules in the country". The proposal forms part of the state's Sustainable Data Centre Action Plan, which sets expectations for development across planning, water, environment and energy, and outlines how the government will coordinate support.

The move comes as energy demand from data centres in Victoria grows rapidly and communities around Australia raise concerns about the sector's pressure on land, water and power. Data centres conventionally rely on water-based cooling, a practice that has drawn scrutiny in drought-prone regions. According to the state government, data centres in Victoria currently account for less than 1% of drinking water used for cooling.

Major operators in the state include NEXTDC, AirTrunk and CDC. Earlier this month, AI company Anthropic signed its first data centre lease agreement in Brisbane, Queensland.

While the federal government has promised to impose restrictions on data centre resource use from 2027, it continues to encourage an investment boom that economists estimate could reach A$150 billion ($106.82 billion) in Australia by 2030.