The Australian government has announced a new regulatory framework to govern the rapid expansion of large-scale artificial intelligence data centres. Prime Minister Anthony Albanese confirmed that the government will move from its current case-by-case approach to a set of mandatory national standards. These rules will require data centre operators to underwrite their own new power supply, ensuring that the massive energy demands of AI infrastructure do not lead to higher electricity bills for Australian households or businesses. The policy aims to balance the country's ambition to become a global AI hub with the need to protect national energy security and grid stability.
Under the new framework, developers will be legally obligated to contribute at least as much energy to the grid as they consume. The standards also mandate that operators pay their full share of connection costs and demonstrate high levels of water efficiency. To oversee these requirements, the government is establishing an Office of AI within the Department of Prime Minister and Cabinet. This office will coordinate policy across various sectors, including energy, industry, and national security, to ensure a consistent national approach.
The government plans to work with state and territory leaders through the National Cabinet process before introducing the legislation to parliament early next year. By setting these terms now, the government hopes to provide long-term certainty for investors while ensuring that the physical footprint of AI—which requires significant land, water, and power—is developed in a way that aligns with Australia's national interests. This shift marks a significant evolution from the non-binding expectations for data centres released by the government earlier this year.