Victoria to Ban Datacentres in Residential Areas
Victoria will ban datacentres in residential areas, near schools and childcare centres and in rural areas that cannot support them, under new state government rules to be released on Tuesday 22 September.
Premier Ben Carroll is to release the sustainable datacentre action plan on Tuesday after cabinet approval on Monday 21 September, according to details reported by The Guardian. The plan prohibits new facilities in residential zones, near schools and childcare centres, and in rural areas deemed unable to support them. It also imposes a 150-metre buffer zone between new datacentre developments and homes.
The setback is explicit. Some residential homes sit within 15 metres of the boundary of NextDC's Footscray datacentre, known as M3. That facility is the subject of an application for fast-tracked approval to expand to cover 10ha, drawing 225MW of power and running 24/7. The distance is tenfold.
The rules include energy and water obligations. New datacentres will be required to source their own renewable energy and to pay for connection costs and network upgrades. They will be required to use recycled or non-drinking water for cooling or offset their usage. The conditions are financial as well as physical.
Labour and community conditions are attached. New datacentres must provide a 'local investment guarantee' which could include jobs, Tafes and parks. They must employ Victorians during construction and train people for long-term jobs. The plan mandates 'fair community consultation' for datacentres.
The framework is described as a $5.5 million investment in the Sustainable Data Centre Action Plan, as set out by the Victorian Government. Earlier government statements said the plan would leverage land, energy and talent to unlock projects in the pipeline. The September rules set siting, energy, water and consultation requirements for those projects.
Three proposals have been identified in reporting on the sector. NextDC has lodged the M3 expansion proposal at Footscray. It has also bought 169ha of land just outside Geelong that had been earmarked for future residential development. Separately, Syncline Energy plans to develop a 350ha, 2.4GW datacentre in Plumpton in Melbourne's outer north-west.
The announcement follows separate developments on lobbying and national coordination. NextDC sent correspondence requesting Victorian MP Melissa Horne to lobby on its behalf for support of a hyperscale datacentre factory, an episode reported by The Guardian that included accusations its lobbying correspondence allegedly contained AI-created errors. At national level, Australia's First Ministers agreed that large data centres bring material energy, water and land-use impacts, according to the National Cabinet statement.
The broader context here is how states reconcile demand for digital infrastructure with planning, grid and water systems designed for different loads. Victoria is tying permission to self-provision of power, payment for grid works, non-potable cooling, setbacks and local hiring. For operators, that shifts site selection toward industrial land with firm energy and water access and away from residential edges. For councils and residents, it creates clearer tests for consultation, benefits and refusal. What may come next is assessment of the pipeline projects against those tests, and whether other jurisdictions adopt comparable conditions.
