Prime Minister Anthony Albanese has announced a new national framework to regulate the rapidly growing data centre industry in Australia. Under the proposed plan, large-scale data centres will face a legal obligation to underwrite new renewable energy projects and pay their full share of grid connection costs. The government aims to ensure these energy-intensive facilities act as net-generators of power rather than net-users, preventing additional costs from being passed on to households and businesses. This policy shift is part of a broader effort to manage the infrastructure demands of the artificial intelligence boom.
Data centres currently consume about 2% of Australia’s grid-supplied energy, a figure projected to rise significantly over the next decade. While these facilities are essential for the digital economy, their high power and water requirements have sparked concerns about their impact on the national energy transition. The government’s new standards will also mandate that developers minimize water use and maximize energy efficiency, with the goal of creating a consistent, national approach across all levels of government.
Industry representatives have acknowledged the need for clear rules, though some have noted the difficulty of aligning the timelines of new renewable energy projects with the construction of data centres. The government plans to consult with state and territory leaders at next month’s National Cabinet meeting, with the aim of introducing legislation to parliament in early 2027. This framework is intended to provide greater certainty for investors while protecting the country’s energy resilience and affordability.