Australia will implement national minimum standards for data centres, including limits on location near schools, homes, and prime farmland, and enforce rules to minimize community impact along with water and energy-use requirements.

The proposed legislation would set nationwide obligations for datacentres to avoid driving up energy prices, cover infrastructure costs, and reduce water use, with pre-existing projects under state laws exempt from the new rules.

Energy standards for AI data centres will be pushed at National Cabinet, despite some states opting out or opposing parts of the framework.

AEMO notes uncertainty as many 2025 projects were cancelled or slowed, while existing facilities take time to ramp, but new generation and storage capacity should improve reliability.

Public support for the policy is high, with about 82% backing the requirement at the time of announcement.

Industry players, including Google and Microsoft, support the initiative in principle, though details on compliance measurement and what counts as new generation remain unclear.

Grid-connection delays pose a practical bottleneck; even approved renewable projects may stall if unable to connect to the grid.

The datacentre push aligns with broader federal AI regulation efforts, including rules on AI model training and safety to complement infrastructure standards.

US-based Anthropic has lobbied to loosen copyright rules to aid AI training, drawing pushback from media, musicians, and creators in multiple jurisdictions.

New South Wales is reviewing roughly 26 new data centre projects worth about AU$100 billion, alongside a large existing base and strong past growth.

Policy aims to ensure AI benefits are broadly shared, bolster national sovereignty and security, and maintain energy reliability while supporting innovation.

Water efficiency mandates will push operators to use non-potable sources, with projected cooling water use in Sydney potentially rising significantly by the mid-2030s.