Victoria has published its Sustainable Data Centre Action Plan.

In September 2026, the Victorian Government released its Sustainable Data Centre Action Plan (Action Plan). It sets out the government's expectations for data centre development and the performance measures Victorian authorities will use to assess proposals. The Action Plan aims to give proponents greater certainty in the early stages of planning. It builds on Victoria's existing planning, environmental, water and energy frameworks rather than replacing them. The framework will be enforced through a new data centre category in planning legislation, together with new notification and referral controls.

The Action Plan focuses on four key enablers, discussed in more detail below:

- Land use, location and local impact;

- New energy supply and grid readiness;

- Protecting drinking water and securing supply; and

- Victorian jobs, skills and local benefits.

The Action Plan is designed to align with the Australian Government's expectations of data centre and artificial intelligence (AI) infrastructure developers. The Victorian Government has said it will continue to develop guidance with stakeholder input and will engage with the Commonwealth as it develops further legislation.

## Why the Action Plan Matters

Victoria is home to more than 50 data centre facilities, making it Australia's second-largest data centre market. National data centre electricity demand is forecast to rise from around 3% to 6% by 2029, and to around 12% to 13% by 2035–2036. In Victoria alone, electricity demand almost doubled over the 12 months to mid-2026, placing considerable pressure on the state's energy network.

The Action Plan is Victoria's response to these pressures. It is intended to give local communities confidence that appropriate safeguards are in place, and to give proponents predictable and clear development guidelines. It emphasises early site selection and planning, rather than attempting to mitigate poor planning later.

## Clear Requirements and Pathways

The Action Plan clarifies planning, infrastructure and environmental requirements before proponents commit capital. The government is committing to a suite of facilitation measures for proponents and their advisors in the early stages of development, including:

- **Investment Front Door**, a single entry point for major data centre investments, so proponents deal with one team rather than negotiating department by department.

- **Pre-application information** covering site identification, site due diligence, infrastructure availability and applicable requirements, to support early feasibility assessment.

- **Coordinated input** from statutory corporations, including VicGrid, Energy Safe Victoria, WorkSafe Victoria, Fire Rescue Victoria and the Environment Protection Authority (EPA).

- **State mapping** of Victoria's energy, water and telecommunications capacity, to identify servicing constraints early.

- **Investment Coordinator-General**, an escalation point for projects of state significance that resolves cross-agency delays and provides accountability.

Requirements will be published and reviewed to keep pace with technological change, without shifting unpredictably for projects already underway.

## The Four Enablers

### Enabler 1: Land Use, Location and Local Impact

The government expects data centres to be built away from sensitive uses such as homes, schools and childcare centres, and is committed to prohibiting new developments in the Green Wedge Zone. Investment should be directed to locations with robust access to power, water and telecommunications capacity. The Action Plan recognises that certain critical infrastructure, such as hospitals and universities, often requires nearby data centres, and the government is committed to working with industry to allow appropriate exceptions.

A new land use definition for data centres will be introduced into Victorian planning schemes:

> "Land used to collect, distribute, process, or store digital data. It does not include collecting, distributing, processing, or storing digital data if it is ancillary to another use of the land."

Key locational controls include:

- a 150-metre buffer between residential buildings and new data centre developments;

- a prohibition on data centres on residentially zoned land; and

- a prohibition in rural zones, unless the facility is located next to critical infrastructure that supports the development.

These controls will be supported by a statewide planning policy guiding location, design, scale and infrastructure requirements. Detailed siting, design and built-form guidance is expected to be developed in 2027 following stakeholder engagement.

Before construction begins on public road verges, footpaths or traffic lanes, developers must satisfy mandatory state safety requirements. Referral status will be extended to WorkSafe Victoria, Fire Rescue Victoria, VicGrid and the relevant water corporation for all data centre applications.

Applicants must comply with a statewide nighttime noise limit of 55 A-weighted decibels, with a penalty applied for the tonal hum characteristic of cooling equipment. Where several premises affect a location, their noise impacts will be assessed cumulatively. To protect local air quality and human health, proponents must restrict backup diesel generation to emergencies and testing, deploy the best available emissions technology, and engage proactively with local communities.

Additional consultation measures are planned for data centres, although existing notice requirements under the EPA's development licence application process will continue to apply. Proponents will be required to notify immediate neighbours, publish detailed application documentation online, and erect prominent signage on the proposed site.

### Enabler 2: New Energy Supply and Grid Readiness

Data centre electricity demand is expected to be met through new investment in renewable energy, without increasing network costs or compromising reliability for other energy users. Proponents will be required to:

- offset operational electricity use by investing in new renewable generation and storage;

- cover all connection costs;

- participate in demand flexibility services to the maximum extent commercially and technically possible; and

- achieve high levels of power-usage effectiveness.

These requirements are expected to contribute positively to Victoria's legislated emissions reduction and renewable energy targets.

### Enabler 3: Protecting Drinking Water and Securing Supply

Data centres that use water for cooling are expected to use recycled or non-potable water. Where this is not possible, developers are expected to pay to replace the drinking water they use. For facilities relying on drinking water as an interim measure, a plan must be designed to reduce consumption during water restrictions. Facilities using water-intensive cooling, such as evaporative or open-loop systems, are expected to use recycled or non-potable water or, where this is not feasible, to hold an agreement with their water corporation to transition to those sources when available. Proponents are also expected to meet the full cost of constructing and operating necessary water infrastructure.

The government highlights the state's recycled water capacity as a point of difference, noting that Victoria produces the largest volume of Class A recycled water in Australia. To support proponents, the government will provide clear water strategy guidance for industrial consumers and prepare standardised, data centre-specific templates for water corporations to inform approval decisions.

### Enabler 4: Victorian Jobs, Skills and Local Benefits

Given the scale of investment involved, the Action Plan expects the sector to maximise opportunities for Victorian jobs and training across construction, specialised operational roles and the broader supply chain. Proponents are expected to contribute in four ways:

- Support the training of construction and operational workers through apprenticeships, partnerships or scholarships linked to real employment.

- Prioritise Victorian local suppliers and content.

- Coordinate with industry, unions and government to ensure skills development keeps pace with demand and delivers benefits across the economy.

- Hire individuals and training providers in the region where the project is located.

Victoria's existing skills base and the AU$8.1 million Digital Jobs – AI Career Conversion program provide a foundation for these workforce expectations, supporting workers moving into digital technology-compatible roles.

## Alignment with the National Framework

The Action Plan is designed to align with the Australian Government's expectations of data centre and AI infrastructure developers, and with the August 2026 agreement by Australian National Cabinet that large data centres require consistent, mandatory national standards.