On 25 August 2026, we published Data centre planning and approvals, a national perspective, an insight series examining the regulatory frameworks for data centres in New South Wales, Queensland and Victoria.

Since then, Victoria’s regulatory landscape has shifted significantly.

On 22 September 2026, the Victorian Government released the Sustainable Data Centre Action Plan (Action Plan) to address growing concerns about the environmental and community impacts of data centres. It sets a new framework for the planning and operation of these facilities across the state.

The Action Plan aligns with the National Cabinet agreement in August 2026 that large data centres require consistent, mandatory national standards covering energy, water and land-use impacts. It is organised around four enablers:

• land use, location and local impact
• energy supply and grid readiness
• protecting drinking water and securing supply
• Victorian jobs, skills and local benefit.

The Action Plan introduces location restrictions, energy and water supply requirements, and local benefit obligations. The Victorian government describes these as ‘strongest, clearest data centre rules’ in Australia.

The key enablers and requirements are:

1. Land use

• The Action Plan introduces a new data centre land use definition 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.’
• The Victorian Government has committed to prohibiting new data centres in Green Wedge Zone land. The Action Plan extends this by prohibiting data centres on residential zoned land and introducing a 150-metre buffer between a residential building and a proposed data centre building. Data centres will also be prohibited in rural zones unless located near infrastructure critical to data centre operation. This includes major transmission infrastructure, substations, renewable energy facilities, battery energy storage systems or recycled water infrastructure. A statewide planning policy will guide location, design, scale and infrastructure requirements, with detailed siting, design and built-form guidance to be developed with stakeholder input in 2027.
• The new land use definition and associated locational controls will take effect through amendments to the Victoria Planning Provisions. The planning scheme amendment is yet to confirm how existing permits, and applications already lodged at commencement, will be treated (see further under Key takeaways below).
• Data centres must meet mandatory state safety requirements before starting construction work on public road verges, footpaths or traffic lanes. This includes obtaining a planning permit and road reserve access consent (subject to a 20-day statutory assessment by the Department of Transport and Planning), implementing a traffic management plan through an accredited traffic management company, and obtaining regulatory sign-off on traffic control devices. Proponents should engage early with VicRoads, telecommunications and fibre providers to coordinate traffic management and infrastructure requirements, including shared underground conduits where possible.
• There are further requirements on noise, air quality and emissions, fire and electrical safety, and construction and local amenity.

• Proponents must also comply with existing environmental and community obligations. The General Environmental Duty under the Environment Protection Act 2017 (Vic) binds every facility operator with no minimum threshold. It requires proponents to proactively identify and minimise adverse environmental impacts during initial site selection. Where a proposal involves a high-impact activity within an area of cultural heritage sensitivity, a Cultural Heritage Management Plan must be prepared and approved by the relevant Registered Aboriginal Party before work starts. All data centre proponents, including those using the Development Facilitation Program, must actively engage with local communities, First Peoples and host municipal councils before and throughout the approval process.

2. Energy supply

• Developers must offset actual operational electricity use by investing in new renewable energy generation and storage. Detailed compliance, verification and firming requirements will be finalised in line with Commonwealth standards.
• Data centres must cover all connection costs and network augmentations required as a direct result of new investment, including necessary upstream augmentations. They must also participate in demand flexibility services to the maximum extent commercially and technically possible to help maintain electricity system stability.
• To ensure energy efficiency, developers are expected to achieve high levels of power usage effectiveness (PUE), designed to industry best-practice targets and measured to recognised national standards.
• Finally, data centres must contribute positively to Victoria’s legislated emissions reduction and renewable energy targets.

3. Water consumption

• Data centres using water-intensive cooling systems (evaporative, adiabatic or other open-loop systems) will be expected to meet cooling needs from recycled or other non-drinking water sources or hold an agreement with their water corporation to transition when these sources become available. Facilities must design to a dWUE of no more than 1.0 for potable water or no more than 1.6 for non-potable water, measured in line with ISO/IEC 30134-9:2022 and publicly report water use aligned to national standards.
• Where recycled or non-drinking water is not yet available, data centres must agree a plan with the relevant water corporation to offset interim drinking-water use through funding agreements or water-efficiency programs. Facilities relying on drinking water as an interim measure must also be designed so that water use can be reduced when restrictions apply.
• As with energy supply, data centres will need to cover the full cost of implementing water infrastructure.
• For national consistency, data centres must also comply with any national water-use standards that are being developed by the Australian Government.

4. Community benefits

• The Action Plan requires data centre developments to deliver a Local Investment Guarantee. This guarantee is intended to go beyond the regulatory and compliance expectations in the Action Plan and should deliver a proportionate, enduring and measurable local impact.
• Investments that must be considered include local employment, skills development, training partnerships (including apprenticeships, traineeships, TAFE and tertiary partnerships), engagement with First Nations communities, local procurement, and measures to improve local areas such as trees, parks and community facilities. Where a facility is in regional Victoria or a community with high unemployment, proponents are expected to work with local training providers and employment services to direct employment benefit to the communities hosting these facilities.

5. Planning assessment

• The relevant municipal council remains the responsible authority for applications other than those progressed through the Development Facilitation Program (DFP). The DFP applications are assessed by the Minister for Planning. More details about these application processes can be found in our previous article here under ‘Standard approval pathway’ and ‘Streamlined approval pathways: The development facilitation program’.
• The Victoria Planning Provisions will be formally amended to extend referral status to WorkSafe Victoria, Fire Rescue Victoria, VicGrid and the relevant water corporation for all data centre applications, including those determined by local councils. The EPA already holds statutory referral status for these development types. As with the new land use controls, it is not yet confirmed how applications already lodged will be treated when these expanded referral requirements commence.
• Assessment of large data centre applications will involve two opportunities for public consultation: through existing planning notice requirements and the EPA’s Development Licence application process. Proponents must ensure that immediate neighbours are formally notified, detailed application documentation is published online, and prominent signage is displayed on the proposed site.
• The Action Plan also establishes government facilitation commitments for proponents. The Investment Front Door will serve as the single-entry point to government for major data centre investments, with pre-application information covering site identification, due diligence and infrastructure availability. VicGrid, the relevant water corporation, Energy Safe Victoria, WorkSafe Victoria, Fire Rescue Victoria, the Country Fire Authority and the EPA will coordinate regulatory input. The Investment Coordinator-General will be available as an escalation point for projects of state significance.

Key takeaways for developers and landowners

Under commitment 6 (‘Rules that hold still’), the Action Plan states that requirements will be published and reviewed as conditions evolve. This is intended to keep pace with technology without shifting unpredictably under projects already underway. While this language signals that existing planning permits are expected to be unaffected, and that the new requirements are intended to apply prospectively to new applications, the Action Plan does not expressly protect existing permits or pending applications. Formal transitional provisions, including the treatment of applications that have been lodged but not yet determined and of proposed amendments to existing permits are yet to be confirmed in the planning scheme amendment that will give effect to the new data centre land use category and expanded referral requirements. Proponents with pending or proposed applications should seek early planning and legal advice, and engage with the Investment Front Door, to understand how the new framework may apply to their project.

Industry reports indicate that some elements of the framework will take effect before the Victorian Government enters pre-election caretaker mode on 3 November 2026. The timeline for the remaining components — including the statewide planning policy and detailed guidance flagged for 2027, which are contingent on the government’s re-election — remains uncertain. With certain requirements also subject to further Commonwealth guidance, developers should begin considering the implications now to ensure any proposed developments remain feasible:

Read the full data centre planning series: Data centre planning and approvals: A national perspective | Gadens