Introduction

Victoria occupies a distinctive position in the Australian data centre landscape. Unlike other jurisdictions, data centres are explicitly recognised within the Victorian Planning Provisions as a 'Utility Installation' under the land use definitions at Clause 73.03 of the Victorian Planning Provisions. This express recognition provides a degree of definitional certainty that is absent in Queensland and, to a lesser extent, in New South Wales.

Victoria is emerging as a critical jurisdiction at the intersection of the energy transition and the digital economy. The state's legislated renewable energy targets, its Sustainable Data Centre Action Plan and the availability of the Development Facilitation Program (DFP) for strategically important projects create a regulatory environment that is both supportive of data centre investment and increasingly rigorous in its environmental expectations.

However, the standard planning approval pathway retains full third-party objection and merits review rights at VCAT and community opposition—as demonstrated by the NextDC M3 expansion in West Footscray—can create significant delay and uncertainty. This article examines the Victorian planning framework, the DFP fast-track pathway and the legal risks developers must navigate in securing planning and environmental approvals for data centres in Victoria. The broader national policy context and comparison with New South Wales and Queensland are addressed in our introductory article, Planning approvals for data centres: A national perspective.

Federal context: Net generators, not Net Users

Victoria's data centre regulatory framework operates within the overarching federal policy direction that large-scale data centres must be 'net generators, not net users' of electricity.

Data centres currently consume approximately 2–5% of Australia’s electricity, forecast to triple by 2030–31 to approximately 15.6 TWh (about 6% of national demand). The federal government has reserved the right to override inconsistent state approaches if required. There is presently no clarity as to how this will operate in practice.

Legislative and planning framework

Planning and Environment Act 1987

The primary planning approval for data centres in Victoria is obtained under Part 4 of the Planning and Environment Act 1987 (Vic) (P&E Act). Unlike NSW’s Environmental Planning and Assessment Act 1979 (EP&A Act), which requires proponents to cross a capital investment or power threshold to access the state-significant pathway, Victoria’s framework applies uniformly to all planning permit applications, with differentiation occurring through the DFP for major projects.

Land use classification

Data centres are explicitly classified as 'Utility Installation' under the land use definitions at Clause 73.03 of the Victorian Planning Provisions. This express recognition provides definitional certainty, developers do not face the categorisation ambiguity that exists in Queensland (where data centres are assessed by analogy to 'industry' or 'research and technology' uses).

The 'Utility Installation' classification triggers assessment under the relevant zone provisions and overlay controls applicable to the site. Industrial zones typically contemplate such uses, though environmental and amenity overlays may impose additional requirements.

Standard approval pathway

Under the standard approval pathway, a planning permit application involves:

• lodgement with the responsible authority (typically the local council)
• third-party notification under section 52 of the P&E Act
• community objection rights under section 57 of the P&E Act
• determination by the responsible authority
• merits review at the Victorian Civil and Administrative Tribunal (VCAT) by either the applicant or objectors. This includes the right for the applicant to appeal conditions imposed by the responsible authority.

This standard pathway provides full participatory rights and dual appeal mechanisms (applicant and objector), which can in turn create timeline uncertainty.

Streamlined approval pathways: The development facilitation program

The Development Facilitation Program (DFP), established under Part 9A of the P&E Act, is Victoria's primary mechanism for expediting state significant and strategically important development, including data centres.

Eligibility

Data centres may access the DFP where the construction cost exceeds:

• $10m in regional Victoria, or
• $20m in metropolitan Melbourne.

Given that modern data centre facilities routinely exceed these thresholds, the DFP is effectively available for all significant proposals.

DFP process

Under the DFP:

• the application is lodged directly with the Minister for Planning (bypassing local council as the responsible authority)
• the Minister may waive or vary certain planning scheme requirements
• decisions cannot be appealed through VCAT
• the Victorian Government's Sustainable Data Centre Action Plan explicitly supports data centre access to the DFP.

The combination of ministerial determination and appeal exclusion makes the DFP the most attractive pathway for proponents seeking timeline certainty and reduced third-party challenge exposure.

Strategic considerations

While the DFP offers significant advantages, developers should be mindful that:

• ministerial decisions remain subject to judicial review (though not merits appeal)
• there are no review rights available for conditions included in Ministerial permits issued through the DFP process
• the political dimension of ministerial involvement, decisions carry government endorsement and may attract heightened media scrutiny
• community engagement remains advisable even where formal objection rights are limited, to manage reputational risk and maintain social licence.

Appeal and legal challenge risks

VCAT merits review

Under the standard approval pathway, both the applicant (on refusal or conditions) and objectors (on grant) may seek merits review at VCAT. The Tribunal conducts a de novo hearing (i.e. stands in the shoes of the original decision maker) and may affirm, vary or set aside the responsible authority's decision.

Objector appeal risk under the standard pathway is moderate to high for data centres, particularly where:

• the facility is located near residential areas
• noise impacts (particularly low-frequency hum from cooling systems) are anticipated
• light pollution or visual amenity concerns arise
• loss of industrial land for alternative employment-generating uses is inconsistent with strategic planning policy for that area.

Case study: NextDC M3, West Footscray

The NextDC M3 Data Centre expansion in West Footscray illustrates the practical risk profile. Residents raised objections regarding noise (the continuous hum of air conditioning systems), light pollution, health and wellbeing impacts and loss of industrial land that might otherwise support diverse employment. These objections, while not necessarily fatal to the application, create delay, impose conditions and generate reputational risk.

The original permit application for the construction of the NextDC facility was assessed via the standard approval pathway and received over 80 objections. Despite the volume of objections, the original permit application was approved by Maribyrnong City Council in 2021. NextDC sought to expand the facility and lodged a further application through the DFP, fast-tracked assessment pathway. This DFP application has since received 5 objections including one from the Maribyrnong City Council. However, as the DFP pathway bypasses local Council involvement, the application is currently undergoing review by the Minister for Planning.

DFP and appeal exclusion

Critically, projects approved through the DFP are not subject to VCAT appeal. This exclusion applies to both applicant and objector appeals, providing significantly greater approval certainty. However, judicial review on legal grounds remains available even for DFP decisions.

Judicial review

Irrespective of whether the standard planning pathway or DFP pathway is pursued, planning decisions remain subject to judicial review on grounds of jurisdictional error, procedural unfairness and legal unreasonableness.

Therefore, it is critical that applicants ensure procedural regularity and adequate consideration of mandatory matters to minimise legal challenge risk.

Energy and water requirements

In addition to a planning approval, data centres will typically require a separate environmental approval.

Victoria's energy and water requirements for data centres operate at the intersection of the state's climate commitments, EPA regulatory requirements and the federal 'net generator' framework.

Renewable energy targets

Victoria has legislated renewable energy targets that establish the state-level policy environment within which data centre energy procurement occurs. The interaction between these targets and the federal requirement for 'additional' renewable generation means that data centres cannot simply claim existing Victorian renewable capacity, they must contract for genuinely new supply.

EPA requirements

The Environment Protection Regulations 2021 (Vic) (EP Regulations), made under the Environment Protection Act 2017 (Vic), prescribe the circumstances in which environmental permissions, permits and licences are required for commercial, industrial and trade premises in Victoria. While the EP Regulations do not specifically identify a data centre as a prescribed activity requiring an EPA permission, permit or licence, certain activities associated with the operation of a data centre may trigger requirements under the EP Regulations. These may include activities relating to noise emissions, contamination risks, waste management, diesel fuel storage and backup generation systems.

In practice, the planning permit and EPA approval processes often run concurrently, as the responsible authority or the Minister for Planning will generally seek comfort that any relevant environmental approval pathway has been identified and appropriately addressed when assessing a planning permit application. There is no standard EPA permission, licence or permit that applies to every data centre development. It is common for a planning permit application to include an EPA assessment or environmental management component addressing any site-specific environmental risks and approval requirements.

Community engagement

VicGrid's Community Engagement and Social Value Guidelines for Renewable Energy and Transmission Projects (September 2025) establish expectations for community engagement that extend to the renewable energy infrastructure that data centres must now procure. These guidelines create indirect obligations on data centre operators whose PPAs trigger new generation or transmission projects in Victorian communities.

Key Takeaways for developers 

Read the full series

• Planning approvals for data centres: A national perspective
• Data centre planning approvals in Queensland
• Data centre planning approvals in New South Wales