Australia's Victoria proposes new data centres must secure their own renewable energy supply

Sept 22 (Reuters) - Australia's Victoria state has proposed that new data centres in the region will have to secure their own renewable energy supply, among other requirements, as part of its sustainable data centre development plan.

The proposed new rules, which would also ban data centres from residential zones and require them to use non-drinking water for cooling, come as data centre energy demand in Victoria grows rapidly and communities across Australia push back against the sector's growing strain on land, water and power resources.

Earlier this month, AI company Anthropic signed its first data centre lease agreement in Brisbane, Queensland.

Victoria's Premier Ben Carroll, who announced the proposal on Tuesday, called the regulations the "strongest, clearest data centre rules in the country".

The rules would require data centres to secure their own renewable energy supply and storage, bear the connection costs and network upgrades, and use recycled or non-drinking water for cooling.

They would also prohibit the construction of data centres in residential zones, near schools and childcare centres, and in rural areas that cannot support the infrastructure, while also passing on the responsibility to manage traffic during construction and operation of these facilities that power AI growth.

Conventionally, data centres rely on water-based cooling systems, raising concerns among policymakers and local communities, especially in drought-prone regions.

Data centres in Victoria currently use less than 1% of the state's drinking water for cooling, according to the Victoria government's statement.

NEXTDC NXT.AX, AirTrunk and CDC are some of the major data centre operators in the state.

The new set of rules is part of the Victorian government's Sustainable Data Centre Action Plan that sets out what is expected of data centre development in Victoria across planning, water, environment and energy, and how the government will coordinate to support it.

While the Australian government previously promised to set restrictions from 2027 over data centre resource use, it continues to court an investment boom that economists say may total A$150 billion ($106.82 billion) in Australia by 2030.