Victoria mandates renewables for new data centres

Victoria has announced rigorous new limitations on data centres being built, with full restrictions on providing their own renewable power and energy storage, along with siting restrictions away from residential areas.

Victorian Premier Ben Carroll said data centres will need to bring their own renewable energy supply and storage.

“Data centres use a large amount of electricity and demand is rising. That growth can’t come at the expense of Victorian consumers,” he said. “Under our rules, data centres will bring their own renewable energy supply and storage.”

“They’ll be required to match new demand with new generation, plus meet connection costs and network upgrades.”

An associated 20-page report titled “The Sustainable Data Centre Action Plan” said that Melbourne has become Australia’s second‑largest market for data centres, with $5.8 billion spent in capital expenditure in 2025. More than 50 operate across the state.

The new rules don’t apply retroactively to built data centres or to applications already under assessment. It also doesn’t state a firm deadline but details a staged plan throughout 2027 to implement separate elements while also gathering feedback from stakeholders.

The state is already targeting renewable energy targets of 65% by 2030 and 95% by 2035, which includes energy storage targets of 2.6 GW by 2030 and 6.3 GW by 2035.

Rules not quantified, but off-grid not allowed

The action plan covers both what government bodies must do to implement the new ideas for data centres, but doesn’t make detailed specifications.

For now, the most detailed elements are found in a table below, where developers will need to “bring your own supply” and “maintain system security.”

This involves, quote: “Offset actual operational electricity use by investing in new renewable energy generation and storage. Detailed compliance, verification and firming requirements to be finalised in step with Commonwealth standards,” indicating some ongoing work required to fully regulate this requirement in line with Australian standards.

One note is that data centres will not be allowed to operate off-grid, with a requirement that data centres participate in demand flexibility services “to the maximum extent commercially and technically possible,” without further detail. Another requirement says a “high levels of power usage effectiveness” must be achieved, for example, to reduce grid draw when renewables are in short supply.

Grid connections must also be paid for by developers.

From ESS News