Following National Cabinet’s agreement in August to introduce nationally consistent requirements for large data centres, the Commonwealth has released its consultation paper setting out proposed national standards for large data centres and AI infrastructure.
The proposed standards would introduce requirements around energy, water, infrastructure costs, community engagement, location and workforce impacts. For the largest projects, they could have implications well beyond the data centre itself, affecting how projects are structured, where they are located and how supporting infrastructure is delivered.
A tiered approach based on scale
The Commonwealth is considering a tiered approach based on the electricity capacity of a data centre. Facilities below 30MW could be excluded from the national standards, with baseline requirements applying to facilities between 30MW and 100MW and more substantial requirements applying above 100MW, or potentially to cumulative portfolios reaching 150MW. These thresholds are subject to consultation and are not yet final.
The Government is also considering how the standards would apply to projects already progressing through planning and development, but which are not operational when the standards commence. For developers with projects already in the pipeline, the timing and transitional arrangements will therefore be important.
Energy becomes part of the project
For very large data centres, the proposed requirements increasingly make energy supply part of the project itself. The Commonwealth proposes that data centres subject to the standards bring forward new renewable generation sufficient to match their energy demand, supported by firming such as batteries, hydro or gas. The standards could also require demand flexibility and measures to ensure projects do not increase costs for other electricity consumers.
The Government is also considering staged grid connections, allowing a data centre to increase its capacity as additional generation, storage or network infrastructure becomes available. This points to a different project delivery model, rather than treating electricity connection as an input to the development, energy generation, storage, connection infrastructure and the data centre may increasingly need to be planned and delivered as an integrated project.
The scale of some current proposals illustrates the issue. The proposed Western Downs Digital Park in Queensland has a planned capacity of up to 2.16GW and is being developed as a master-planned digital and energy precinct. The project remains subject to planning and regulatory approvals.
Water and infrastructure costs
Water is another significant component of the proposed standards. The Commonwealth proposes requirements to minimise water use, prioritise efficient cooling and non-potable or recycled water where possible, build resilience to water disruptions and pay a fair share of water infrastructure and servicing costs.
For developers, this means water availability and infrastructure may need to be considered much earlier in project planning, particularly for large facilities in regions where existing infrastructure was not designed to accommodate a major new industrial user.
Location and planning
The proposed standards may also influence where large data centres are developed. The Commonwealth is considering whether governments and infrastructure providers should identify suitable locations for data centres away from populated areas, particularly where AI training facilities do not require close proximity to end users.
This could reinforce the trend towards regional locations where land and energy infrastructure are available. It also creates a planning challenge. Regional planning frameworks and infrastructure networks may not have been designed for multi-billion-dollar, gigawatt-scale developments. The question is how existing planning and approval processes can accommodate projects of this scale while maintaining appropriate assessment of their local and regional impacts.
In Queensland, recent legislative changes expressly prevent a data centre operated for research and development or commercial purposes from being declared a State strategic project under the State strategic project framework. That makes the interaction between local government assessment, State referral processes and the proposed Commonwealth standards particularly relevant for major Queensland projects.
Victoria has also released its Sustainable Data Centre Action Plan in September 2026, setting out new requirements it proposes to introduce for data centre development. Under this plan, new data centres will be required to secure their own renewable energy supply and storage, fund their connection to the electricity network and pay for network upgrades required for the project. They will also be required to use recycled or non-drinking water for cooling. The planning rules will restrict development in residential areas, near schools and childcare centres, and in rural areas without the infrastructure required to support these projects.
What this means for major project development
The proposed national standards are not intended to replace existing State and Territory planning and approval processes. Instead, the Commonwealth says the standards would establish nationally consistent minimum requirements alongside existing planning, environmental, energy, water and other regulatory processes.
For major data centre developments, however, the practical effect could be significant. Energy supply, grid connection, water, infrastructure costs, land use and community impacts may all need to be addressed as part of the project structure and delivery strategy rather than as separate considerations.
For developers and investors, understanding these requirements early will be important, particularly where a project is being staged, depends on new infrastructure or is progressing through approvals before the national standards are finalised.
Key takeaways
The proposed standards signal that the requirements for very large data centres will extend well beyond the design and operation of the facility itself. For the largest projects, energy generation, firming, grid connection, water supply and supporting infrastructure may increasingly need to be considered alongside the data centre from the outset, rather than as separate infrastructure issues.
The proposed approach may also influence where these projects are developed. Access to energy, water and suitable infrastructure could make regional locations increasingly attractive, while also raising questions about whether existing planning frameworks and infrastructure networks are equipped to accommodate projects of this scale.
For projects already progressing, the timing of the new standards and their interaction with existing State and local approval processes will be particularly important. Developers will need to consider how the emerging requirements affect project structure, staging, infrastructure delivery and approvals as the Commonwealth moves towards finalising the framework.
As the framework develops, large-scale data centre projects will need to bring together planning, energy, infrastructure and delivery considerations from an early stage. McCullough Robertson works with developers, project owners, investors and other project stakeholders to navigate these issues across the project lifecycle, from planning and approvals through to structuring, delivery and operation.