Victoria has banned new data centres from residential areas and introduced requirements for operators to secure additional renewable energy and limit their use of drinking water, as Australia’s data centre boom faces growing scrutiny over its impact on local infrastructure.
The Victorian government announced the new rules, saying data centres would remain important to the state’s economy but must not place significant pressure on local electricity and water resources.
Under the new framework, data centres will be prohibited in residential areas and subject to a mandatory 150m buffer from houses. Operators will also be required to match new electricity demand with additional generation and cover the costs of associated network upgrades.
Cooling systems will be restricted to recycled or non-drinking water, while data centre developers will be required to “bring their own renewable energy supply”, according to the state government.
“Data centres are vital to Victoria’s economy, but we need to make sure they don’t put pressure on local water and electricity supplies,” the government said.
The measures come as Australia seeks to expand its data centre capacity to support rising demand from cloud computing and AI, while addressing concerns over the infrastructure and resource requirements of large-scale facilities.
Australian Prime Minister Anthony Albanese has been pushing for national standards for data centres as the federal government seeks to balance investment in the sector with concerns from local communities.
Westpac Banking estimates that data centre investment in Australia could reach A$225bn (US$160bn), with the majority of spending expected over the next three years.