Victoria's data centre plan makes new projects bring their own power supply

The Victorian Government published its Sustainable Data Centre Action Plan on 22 September 2026, covering what it expects from new data centres on land use, energy, water and jobs. Law firm Mills Oakley calls the energy settings the plan's most significant element, effectively a "bring your own power supply" model that ties large new loads to new energy supply and supporting infrastructure. A new planning control framework is to deliver the expectations, including a dedicated data centre land use and new referral pathways to energy and water authorities.

Operators are expected to offset the electricity they actually use by investing in new renewable generation and storage. They are also expected to pay for the connection and network augmentation attributable to their projects, upstream works included, to join demand flexibility services, and to design sites that reduce energy losses and run efficiently.

The Australian Energy Market Operator forecasts that data centres could account for approximately 12-13 per cent of National Electricity Market consumption by 2035-36, up from around 3 per cent now. Victoria wants that growth matched by new generation, storage and network investment, so other energy consumers are not left carrying the costs and reliability effects.

The plan sits inside a wider national debate. In March 2026 the Commonwealth set out Expectations of Data Centres and AI Infrastructure Developers, which called for demand growth to be accompanied by clean generation, storage, efficiency measures and demand flexibility participation. National Cabinet agreed in August 2026 to develop mandatory national standards for data centre projects, although views have since split on the role of conventional generation. Mills Oakley says Victoria has largely kept to the Commonwealth's original direction, and that the state requirements are meant to operate alongside the national standards, so both will matter to Victorian projects.

The firm expects power procurement to become a core part of the investment case, rather than something dealt with after major development decisions are made. It says securing renewables, storage and network access is likely to shape site selection, approval pathways, connection costs and financing. If time-based matching is adopted, it says developers may have to move beyond traditional run-of-plant PPAs to firmed renewable products, hybrid renewable and storage deals, or other structures able to supply power around the clock. It also advises that PPAs signed before the framework is settled address change-in-law risk, certificate arrangements and who bears any future firming obligations.

For renewable and storage developers, Mills Oakley says the reforms create a new type of customer with a regulatory reason to contract for new capacity. It expects connection talks to give greater weight to funded augmentations, prudential support and future cost allocation. The firm notes that significant implementation detail is still to be settled.