An Australian state has mandated energy storage requirements for new data center deployments, raising operational and capital barriers to new capacity expansion.

Victoria, Australia's second-largest data center market, has announced strict new regulations requiring data centers to source their own renewable energy and storage. Victorian Premier Ben Carroll stated that data centers will need to bring their own renewable energy supply and storage, with requirements detailed in the 20-page "Sustainable Data Centre Action Plan."

Melbourne's data center sector has experienced significant growth, with AUD $5.8 billion in capital expenditure in 2025 and over 50 facilities operating across the state. New data centers must also site away from residential areas.

The requirements support Victoria's broader renewable energy targets: 65% renewable energy by 2030 and 95% by 2035, alongside energy storage targets of 2.6 GW by 2030 and 6.3 GW by 2035.

The rules do not apply retroactively to existing data centers or to applications already under assessment. Implementation will occur in stages throughout 2027, with detailed compliance requirements to be finalized in coordination with Commonwealth standards.

Developers must "offset actual operational electricity use by investing in new renewable energy generation and storage," subject to compliance, verification, and firming requirements to be finalized in step with Commonwealth standards. Data centers are prohibited from operating off-grid and must participate in demand flexibility services "to the maximum extent commercially and technically possible." Facilities must also achieve high levels of power usage effectiveness to minimize grid draw when renewables are in short supply. Developers must bear all grid connection costs.