The Minns Labor Government has today announced a policy framework to support responsible investment in data centres, while ensuring communities, businesses and the broader economy benefit from this important infrastructure.
The NSW Data Centre Policy Framework will make sure future data centre investment is matched with increased investment in renewable energy and water infrastructure.
It establishes clear expectations for data centre proponents, with world-class energy, water and environmental standards, meaningful community consultation and appropriate contributions towards the infrastructure needed to support growth.
The framework sends a clear signal that NSW supports data centre investment that creates jobs, fosters innovation, grows the economy and delivers benefits for communities.
Over the past 24 months NSW has been a Data Centre investment follower lagging behind major developments in Victoria and now South Australia. During the period there have been major developments at GW+ scale in the Northern Territory and Victoria where land and power a cheaper.
Land and power pricing for data centres is relatively higher in NSW whom also falls behind in renewable energy developments.
Beyond powering technologies used in the home and workplace, their computing power and storage also drive many of the services that communities rely on every day, including healthcare, emergency services and banking.
Investment in the sector in NSW has been increasing at around 75 per cent per year on average over the three years to December 2025. This growth, combined with the transformation of NSW’s energy system, is a key reason we have avoided recession.
The NSW Data Centre Policy Framework outlines how this growing digital investment will be used to drive the energy transition and support the state economy. The framework includes:
The NSW Data Centre Guidelines
Under the new framework, data centre builders wanting access to a streamlined assessment process will need to comply with the NSW Data CentreGuidelines.
They require specific performance measures to achieve six principles:
- Apply world-class environmental and efficiency standards
- Impose no net cost to consumers and communities
- Fund additional supply of water and energy
- Enhance local community infrastructure and amenity
- Invest in future industries across the supply chain
- Demonstrate a commitment to training and skills to support jobs.
Projects that meet the performance measures associated with the above principles will receive a commitment to have their proposed developments assessed within 75 days, while still meeting all planning, environmental and community consultation standards.
This commitment is supported by concurrent changes being made to Independent Planning Commission processes to further streamline key project assessment.
The Investment Delivery Authority will also convene an industry collaboration event to connect energy and data centre investors.
The Guidelines will be reviewed annually to ensure they remain fit for purpose and reflect advances in technology and changes in the industry.
Regulatory reform to ensure equitable cost recovery for energy infrastructure
Under the second pillar of the framework, the NSW Government will make regulatory changes to:
- ensure that data centres pay for the electricity network upgrades they require, so that extra costs aren’t shifted to households and small businesses,
- support more coordinated and efficient planning of the electricity network, and
- support implementation of the measures in the Guidelines.
We have introduced legislation to enable these reforms and begin consultation on the detailed implementation today.
An IPART review to consider the full recovery of costs of water provision to data centre customers
The NSW Government is commissioning IPART to undertake a review of the water pricing framework for data centres.
The review will consider how water pricing can reflect the full costs associated with servicing data centres, ensuring other water users on the network are protected and the impacts of drought and water scarcity are appropriately managed.
Office of AI
Alongside the NSW Data Centre Policy Framework, the Government will establish the new Office of AI in The Cabinet Office to strengthen and accelerate the response to the opportunities and challenges presented by artificial intelligence.
The new Office of AI will work closely with Digital NSW, which will continue to lead coordination of government investment in the digital, cyber and data foundations needed to support AI adoption. It will also work with public sector unions to ensure AI supports workers, strengthens capability and is implemented responsibly across the public sector.
The NSW Government will continue working closely with the Australian Government and other states and territories to ensure future reforms establish a nationally coherent policy framework.
