The New South Wales government unveiled the Data Centre Policy Framework to fast-track high-standard data centre projects, built around six principles focused on environmental performance, efficiency, and social impact.

The six guiding principles require world-class environmental and efficiency standards, no net cost to consumers, funding for additional water and energy supply, stronger local infrastructure and amenities, support for future industries, and investment in jobs and skills development.

Australian federal leadership calls for nationwide rules on where large data centres are built and their power and water use, aligning with NSW reforms to stabilize investment and deliver local benefits.

Under the framework, applications are promised a 75-day assessment window, with non-compliant proposals at risk of rejection.

Water and energy supply planning emphasizes more recycled water, drought planning, and a shift toward renewable energy as coal is phased out.

An inquiry highlighted opportunities in AI and the economy, while flagging concerns over electricity demand, water use, infrastructure funding, community impacts, and digital sovereignty.

Protesters and campaign groups are calling for moratoriums and tighter regulation, arguing that AI data centres require thorough community consultation before expansion.

The framework takes effect in the coming Monday, though timelines for IPART review and the Office of AI may extend beyond the initial rollout.

Projections show potential water demand rising to about 250 megalitres per day by 2035, with upfront charges or negotiated services to recover infrastructure costs and potential use of recycled water under relevant legislation.

IPART will review water pricing to reflect the full cost of supplying data centres, including drought-related considerations.

Industry groups like Equinix, AirTrunk, and Data Centres Australia back clearer planning pathways, renewable energy investment, energy efficiency, and sustainable technology development.

Regulatory reforms aim to recover electricity network investment costs from data centre operators rather than households, with public consultation running mid-August to mid-September 2026; water cost reforms will also be reviewed by IPART.