On 23 March 2026, the Australian Government published its Expectations of Data Centres and AI Infrastructure Developers, setting out five key expectations for the industry (National Expectations). Read our article on this here.
Key takeaways
- The Australian Government set out five National Expectations for data centre and AI infrastructure developers, which will influence Commonwealth regulatory priorities.
- NSW moved quickly to align with these expectations through its Data Centre Consultation Paper.
- The NSW framework proposes five principles broadly consistent with the National Expectations, with a stronger focus on state-based outcomes.
- Data centre proponents should prepare for increased scrutiny on energy and water use, infrastructure funding and alignment with strategic planning policies.
- Submissions on the Consultation Paper close on Friday 8 May 2026.
The National Expectations provide guidance on how the Commonwealth Government will prioritise data centre proposals in regulatory assessments. However, development applications for data centres are assessed under state and territory planning law frameworks. As a result, the practical impact of the National Expectations depends on how they are adopted at a state level.
In NSW, the Government signalled early alignment with the National Expectations through the release of its ‘NSW Data Centre Consultation Paper’ (Consultation Paper). This reflects NSW’s position as a leading jurisdiction for data centre investment. At the same time, the NSW Government announced that 15 data centre development applications, with a combined value of $51.9 billion, have been endorsed by the Investment Delivery Authority for fast-tracked assessment. This builds on the approximately 90 data centres already operating across the state.
NSW’s proposed planning principles
The Consultation Paper outlines five principles that the NSW Government intends to embed into the planning framework for assessing data centre proposals. These principles are broadly consistent with the National Expectations, but tailored to state priorities:
- Investment in data centres should enable a wider technology ecosystem that drives job creation and propels economic growth.
- Data centre developers and operators need to fund their infrastructure requirements, in addition to what is already planned and funded, to avoid increasing prices for households.
- Data centres need to be efficient and make sustainable use of our energy and water systems as well as the environment.
- Data centre approval and compliance must be based on reliable and transparent data.
- Regulatory and planning settings must take account of differences in the size and location of data centres, and community needs.
The NSW Government intends to develop detailed data centre guidelines based on these principles. These guidelines will be used in assessing state significant development applications. Industry feedback on the Consultation Paper will inform their design and is intended to support a more streamlined approvals process.
Implications for proponents
Data centre proponents should closely monitor the development of the NSW framework, particularly in relation to:
- sustainable use of energy and water demand
- exposure to development contributions (or other monetary contributions) to fund infrastructure requirements
- alignment with strategic planning policies to mitigate land use conflicts (particularly residential housing and industrial development) and deliver positive social and economic benefits in the locality.
Securing planning approvals is likely to require a more integrated approach. This includes early and effective engagement with government, communities and utilities, as well as robust technical analysis to support applications. Key areas of focus will include energy and water demand modelling, air quality impacts from backup generation, embodied carbon and e-waste management.
What you can do now
- Review the Consultation Paper and assess how the proposed principles apply to current or planned projects.
- Identify potential infrastructure, energy and water obligations early in the development process.
- Strengthen stakeholder engagement strategies with government, utilities and local communities.
- Prepare robust technical data and modelling to support development applications.
- Consider making a submission before the deadline on Friday 8 May 2026.
If you would like to discuss the Consultation Paper or its implications, please feel free to contact our expert Environment and Planning team.