Victoria has unveiled strict new regulations for future server infrastructure, banning facilities from residential neighborhoods and requiring them to utilize renewable energy, according to an announcement made by Premier Ben Carroll and Artificial Intelligence Minister Anthony Carbines. The sustainable datacentre action plan addresses community concerns over power consumption and water usage, though the mandates exempt more than 50 existing facilities and dozens of projects already seeking planning approval.
Where New Datacentres Are Banned and Restricted
Under the state government’s sustainable datacentre action plan, new developments face strict geographic boundaries designed to separate high-energy server farms from populated communities. According to the state government, the regulations implement a complete ban on datacentres near schools and childcare facilities, as well as in rural areas lacking necessary infrastructure. Furthermore, the framework establishes a mandatory 150-metre buffer zone between any new datacentre development and residential homes.
Water and Renewable Energy Mandates for Facility Operators
To curb resource depletion, incoming server hubs must independently source their own renewable energy and fully cover connection costs and electrical network upgrades, according to the official policy documents. Water management rules also require operators to use recycled or non-drinking water for cooling systems or offset their usage entirely. The policy was prompted by data showing 19 pipeline applications were collectively seeking 19,714 megalitres of water annually—equating to 4% of Melbourne’s total supply—contrasting sharply with existing facilities that consume less than 1% of drinking water in Melbourne and Geelong.
Did You Know?
While existing server hubs use less than 1% of drinking water across Melbourne and Geelong, proposed developments like Syncline Energy’s 2.4GW plan in Plumpton would consume more electricity than Victoria’s largest power station, Loy Yang A.
Industry Pushback and Existing Pipeline Loopholes
The policy has drawn mixed reactions from industry stakeholders and political figures. Belinda Dennett, chief executive of peak body Data Centres Australia, called the regulations “disappointing” and warned they could cause investment to relocate to competing states. Conversely, CDC chief executive Greg Boorer welcomed the clarity provided by the framework. Meanwhile, Victorian Greens spokesperson Sarah Mansfield criticized the lack of retrospectivity for the 19 projects currently in the pipeline, arguing it creates a major loophole that fails to protect communities near developments like NextDC’s expanding M3 facility in Footscray.
Frequently Asked Questions
Do the new rules apply to existing datacentres in Victoria?
No. According to the state government, the regulations do not affect the more than 50 existing datacentres currently operating across Victoria, nor do they apply to dozens of projects currently seeking planning approval.
What water usage requirements do new datacentres face?
New operators must utilize recycled or non-drinking water for cooling purposes, or alternatively offset their usage to protect municipal water supplies.
When are federal datacentre rules expected to take effect?
Artificial Intelligence Minister Anthony Carbines stated that the state’s framework is likely to be adopted by federal laws, which are expected to be introduced in 2027.
Community Givebacks and Workforce Training
Beyond physical siting rules, new server operators must contribute directly to local communities through a “local investment guarantee,” which can encompass local jobs, TAFE training programs, and public parks. According to the state action plan, developers are mandated to employ Victorian workers during the construction phase and provide long-term training for permanent operational roles. The framework also enforces mandatory fair community consultation, alongside strict adherence to existing noise limits and fire safety regulations.
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