Victoria has introduced new regulations aimed at strengthening controls over datacentre developments across the state, with the government touting the rules as the most stringent in Australia. The announcement was made on Tuesday by Premier Ben Carroll and Minister for Artificial Intelligence Anthony Carbines, unveiling the state’s sustainable datacentre action plan.
The new measures will ban datacentres in residential zones, near schools and childcare facilities, and in rural areas deemed unsuitable for such infrastructure. A minimum buffer of 150 metres will be required between new datacentre projects and residential properties. Additionally, operators must source their energy from renewable sources and cover the costs for network connections and upgrades. Water use regulations demand datacentres either employ recycled or non-drinking water for cooling or offset their consumption.
The government highlighted that there are currently 19 datacentre applications pending approval, collectively seeking nearly 20,000 megalitres of water annually—equivalent to about 4% of Melbourne’s present supply. In comparison, the existing 50 datacentres collectively consume less than 1% of the city’s drinking water. New developments will also be subject to a local investment guarantee to ensure community benefits through jobs, educational opportunities, and recreational spaces. Employment of Victorians during both construction and operational phases will be mandated, alongside requirements for genuine community consultation, maintaining noise limits, and adhering to fire and safety protocols.
Premier Carroll acknowledged that these regulations do not apply retroactively to existing datacentres or to those currently seeking planning approval, which number over 50. This exemption has drawn criticism from opposition figures and environmental groups, who warn it leaves significant loopholes in the policy. Victorian Greens spokesperson Sarah Mansfield called the lack of retrospective application "a huge loophole," arguing the rules should encompass all projects in the pipeline to be effective.
The government’s approach contrasts with the previous administration’s push to make Victoria the national hub for datacentre industry, a strategy championed by former Premier Jacinta Allan. Federal authorities had signaled intentions for a nationwide renewable energy mandate for datacentres but withdrew that plan following resistance from Queensland and the Northern Territory. Minister Carbines suggested Victoria’s framework is likely to inform federal regulation expected by 2027.
Industry responses have been mixed. Data Centres Australia CEO Belinda Dennett described the plan as “disappointing,” warning that restrictive rules could redirect investment to other states. In contrast, CDC’s CEO Greg Boorer welcomed the clarity provided by the new standards.
The timing of the announcement comes as community opposition to datacentre projects intensifies ahead of the November state election. Concerns have emerged in Labor-held areas, including Footscray, where NextDC seeks approval to expand its M3 datacentre on a site adjacent to residential properties. Labor MP Katie Hall, who opposes the expansion, noted that the new rules would not impact this project.
Critics from the Coalition, including shadow attorney general James Newbury, dismissed the plan as inadequate, citing ongoing developments in unsuitable locations, and indicating that an alternative policy will be unveiled before the election.
Other contentious proposals include Syncline Energy’s plan for a 350-hectare datacentre in Plumpton, which would have a capacity of 2.4 gigawatts—surpassing the output of Victoria’s largest power station, Loy Yang A. This project faces opposition from federal Labor MPs Alice Jordan-Baird and Sam Rae. Similarly, NextDC’s acquisition of land near Geelong, formerly designated for residential use, has raised local concerns, as expressed by Lara MP Ella George.