Australia’s national cabinet has agreed on a framework for new federal datacentre regulations that would require the facilities to run on renewable energy, avoid pushing up electricity prices, and limit water use. The rules, which are expected to be debated in parliament next year, would not apply retrospectively — a gap that experts say could trigger a surge of project approvals in the coming months.
Under the proposed standards, developers would need to bring renewable energy onto the grid to cover their power demand, pay for their own grid connection costs, and ensure datacentres are suitably sized and located away from schools, homes, potential housing, and farmland. Any project approved before the legislation passes would remain subject only to existing state or territory laws.
The Australian Energy Market Operator has identified 225 datacentres in development, with electricity demand from them forecast to climb from 5 to 34 terawatt hours by 2036. However, it remains unclear how many will actually proceed — more than 40% of projects tracked since 2025 either disappeared from the list or had their status downgraded. Still, some projects in the pipeline may secure approval in time to avoid the stricter regime.
One such proposal is Project Mars, a 90MW, three-storey datacentre planned about nine kilometres from Sydney’s central business district. The facility, covering 22,000 square metres near Lane Cove River, has drawn strong community opposition in an area where five datacentres are already approved or proposed. Developer Goodman Group said it would use existing power and 3.5 megalitres of water a day, along with 200kW of rooftop solar, while it explores additional renewable supply.
Sasha Titchkosky from the Lane Cove Responsible Planning group said governments should impose a moratorium on approvals in established residential areas until the new rules are in effect. “At the very least, a moratorium on approvals in established residential areas … it seems to me that would be the responsible thing for governments to do,” she said. Urban planning researcher Crystal Legacy warned that developers would likely race to beat the new rules, and state governments that fast-track applications would do so “at your political peril,” given growing public backlash over environmental and amenity impacts.
Energy minister Chris Bowen has insisted there will be no carve-outs for Queensland or the Northern Territory, despite claims by leaders in both states after Wednesday’s meeting that gas and coal would be available for datacentre power. Bowen said the national standards will require 100% renewables “backed by firming” in every state and territory. The only concession is that state-owned utilities can apply for an exemption if they can prove non-renewable energy is cheaper, with the Australian Energy Regulator assessing each request and the Commonwealth holding final authority. Bowen described proving such a case as “a very hard thing to do.”
Separately, Bowen released quarterly emissions data showing a 1.6% fall in the year to March 2026, driven by solar, wind and batteries replacing coal and gas generation. Electricity emissions dropped by 5.6 million tonnes and battery discharge surged 300%. Australia’s emissions are now 25% below the June 2005 baseline, with the government targeting a 43% cut by 2030 and a 62–70% reduction by 2035. Bowen acknowledged transport still has “a long way to go” in the transition.