Victoria sets new data centre rules on power, location and community investment

The Victorian government has released its Sustainable Data Centre Action Plan, imposing new requirements on data centre operators covering renewable energy supply, site location, water use, traffic management and local community investment.

Premier Ben Carroll said the rules - which the government described as the strongest of any Australian state - require data centres to bring their own renewable energy supply and storage, matching new electricity demand with new generation and covering connection costs and network upgrade costs.

Operators will also be required to use recycled or non-drinking water for cooling. Where that is not immediately possible, they must offset usage and fund any infrastructure upgrades required.

New data centres will be prohibited in residential zones and cannot be built near schools or childcare centres. A 150-metre buffer zone between a data centre building and homes will apply, and developments in rural areas without the infrastructure to support them will not be permitted.

Operators must also submit a traffic management plan covering construction and operational phases.

Under a new Local Investment Guarantee, data centres will be required to deliver community benefits in the areas where they are built. The government said those benefits - subject to consultation - could include local jobs, TAFE programmes and parks. Operators must work with local employment and training services and are required to train Victorians.

The government said the data sector contributed $5.8 billion in capital expenditure to Victoria last year.

"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."

The new rules will not apply retrospectively to development applications already under assessment.

The plan has been developed to complement the Commonwealth's national framework for data centres; in July, the federal government created an ⁠office to force data centres to be net producers of energy and limit their water usage.

In August, the NSW government has issued the NSW Data Centre Policy Framework, intended to ensure future data centre investment is matched by increased investment in renewable energy and water infrastructure.