Albanese seeks National Cabinet deal on datacentre rules

Prime Minister Anthony Albanese is aiming to secure an agreement with National Cabinet on new federal regulations for datacentres at a meeting on Wednesday. The proposed rules are a direct response to the anticipated rush of construction driven by artificial intelligence demand, seeking to balance sector growth with local economic and environmental concerns.

Under the draft framework, developers will be required to prevent their facilities from pushing up power prices. To achieve this, datacentres must bring renewable energy to the grid to cover their electricity demands, ensuring that the broader market does not bear the cost of their consumption.

The regulations also place a financial burden on developers, requiring them to cover their own connection costs. Additionally, the rules mandate that facilities minimise water use, a critical consideration given the sector’s significant cooling requirements and the varying water security across Australian states.

Location and scale are also central to the proposal. Developers must ensure their datacentres are appropriately sized and sited away from schools, homes, potential housing areas, and agricultural locations. This zoning requirement aims to mitigate community opposition and protect existing land use patterns.

Timing remains a key variable for industry players. AI firms are looking to secure approvals in the coming months to avoid the strict new rules, with some potentially locking in exemptions before the regulations are finalised. This has led to growing calls for a moratorium on datacentre construction to prevent a rush of approvals ahead of the new regime.

The outcome of the National Cabinet meeting on Wednesday will determine the immediate trajectory of the policy. While the Prime Minister is aiming for consensus, the rules remain proposed rather than enacted federal law, leaving some uncertainty over the final details and timeline for implementation.