National Push to Regulate Data Centres as Billions Flow in Sydney

Prime Minister Anthony Albanese has announced that a new framework for data centres and AI will be considered by National Cabinet in August, with legislation to follow early next year. The world-first legislation would include obligations for data centres to pay to support the electricity grid, and are intended to streamline and speed up approvals. The move comes as data centre activity continues to ramp up, with Macquarie Technology Group revealing a $3-billion campus play in Sydney’s north, and GreenSquareDC launching a $1.25-billion second stage of another. An Office of AI, within the Department of Prime Minister and Cabinet, has been established to oversee the Australian Standards for AI, which build on previous government expectations for data centres released in March . The Commonwealth will work with states and local communities to site data centres appropriately , potentially avoiding situations such as the Curtin University technology park stoush . Under the new rules, data centres would be expected to underwrite their own new power supply. Requirements would also be introduced for data centres to pay for their connection costs, rather than attributing those costs to ratepayers. Data centres would be mandated to incorporate energy demand response mechanisms, so that power usage can be reduced when required by the grid. Water efficiency standards would also be introduced. Australian Academy of Technological Sciences and Engineering (ATSE) chief executive Peter Derbyshire welcomed the move but said that governance alone would not secure Australia’s competitiveness in the sector. “Global AI investment [is] expected to approach $3 trillion this year,” Derbyshire said. ▲ Data centre development is increasingly underpinning the Australian economy. “Australia has invested just over $300 million over the past five years, while several comparable economies have committed more than 10 times that amount.” AI Institute chief scientist and UNSW professor of AI Toby Walsh said AI was an economy-wide change that needed a whole of government response. “When the UK announced its Office of AI in 2019, they also announced GBP 1 billion of additional funding, the so called AI sector deal to get some of the upside as well as avoid the downside,” Walsh said. “I would love to see Australia look to seize some of the upside not just avoid the downside. Are we going to see the government invest in our AI research base? “The PM understands the issues. The question now is whether this new Office will address them adequately.” Private sector activity not slowing down The news comes as data centre development makes up an increasing proportion of the property sector, and a growing contribution to the economy at large with NSW and Victoria particular winners . The NSW Budget released in June revealed that the state’s growth is being driven by private sector activity in data centres , renewable energy, and electricity infrastructure. This month, data centre operator Macquarie Technology Group announced it had exercised a $240-million option on a parcel of development land at Macquarie Park. ▲ Macquarie operates a 65MW campus at Macquarie Park, with the 47MW IC3 to enter operations this year. The 34,200sq m site, between Talavera Road and the M2 motorway, will be settled using cash reserves and an existing debt facility. Funding pathways for development of a larger technology and research campus are being explored, including asset recycling and development partnerships. A spokesperson for Macquarie Technology Group told The Urban Developer that the estimated cost of that campus, to be co-located with a 200MW data centre, was in the range of $2.5 billion to $3 billion. A completion date in 2029 is projected. The facility will be designed using air cooling technology, limiting its water usage. The spokesperson said that the company had contributed to the development of data centre standards at the Commonwealth level, and that the design of the campus would be in line with government expectations. Meanwhile, GreenSquareDC is exhibiting plans for a $1.25-billion second stage of its SYD1 data centre campus at 3 Brookhollow Avenue in Norwest [ pictured at top ]. ▲ GreenSquareDC says SYD1's first stage retained the existing asset's core and shell—92 per cent of its structural carbon. The project was endorsed by the Investment Delivery Authority as an 80MW expansion of the existing 15MW first stage. However, the proposal on show calls for 96MW, 77 backup diesel generators and 190kL of diesel storage in above-ground tanks. The final campus is expected to top 100MW, with operations beginning in the third quarter of 2026. GreenSquareDC was acquired by Swiss-founded, Colorado-based private equity shop Partners Group in March 2025, bringing a $1.2-billion war chest to bear. The PE firm has invested USD$4 billion into data centres since 2021, with USD$150 billion in assets under management. In May, GreenSquareDC and Partners Group withdrew a proposal for a 120MW data centre in Hazelmere, 15km from Perth . Objections had focused on noise levels from generators running during potential emergency events.

Data Centres
Patrick Lau
Fri 17 Jul 26

National Push to Regulate Data Centres as Billions Flow in Sydney

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