A new investigation by the Australian Broadcasting Corporation (ABC), based on an analysis of planning records and company documents from major industry players including AWS, Microsoft, AirTrunk, CDC, NEXTDC, Goodman and Stockland, has revealed a significant regulatory gap set to open up in Australia’s booming data centre sector.
According to the ABC’s findings, at least 25 data centre projects have already received planning approval but have not yet been built — meaning they will fall outside the scope of the federal government’s forthcoming energy and water efficiency standards. These standards are expected to be legislated by early 2027, but crucially, the rules will not apply retrospectively to projects approved before they take effect.
The scale of what’s at stake is considerable. Combined, the 25 identified projects represent at least 2.9 gigawatts of capacity — roughly double the 1.5 gigawatts that Data Centres Australia estimates is currently generated across the country’s 162 existing operational centres. In other words, a wave of new capacity nearly matching the entire existing industry is poised to come online without being bound by the incoming national standards.
One of the more striking examples cited in the ABC’s reporting is Goodman’s recently approved Project Apollo, a five-storey data centre development in Sydney’s north. The project is expected to take roughly two years to construct, placing its completion timeline squarely within the window before the new rules would otherwise apply — had it been subject to them at all.
Industry says it’s already stepping up, but critics call it insufficient
Belinda Dennett of Data Centres Australia told the ABC that many industry members are voluntarily aligning their practices with the government’s expectations ahead of formal legislation. “[Members are doing so] until the new rules are in force,” she said, while also acknowledging the inherent limitation of that approach: “they cannot comply with something that isn’t yet established or even articulated.”
Dennett further noted that a patchwork of accountability measures already exists across the sector — including NABERS energy ratings, state-based planning conditions, and individual companies’ own sustainability reporting. However, she was careful to point out that none of this current patchwork is standardised or benchmarked against what the eventual federal rules will actually require, leaving a considerable gap between voluntary best practice and enforceable regulation.
From a legal and investment perspective, Kate Muller, a partner at Ashurst Perkins Coie, suggested the regulatory uncertainty isn’t proving to be a major deterrent. She characterised developers as generally accustomed to operating with a degree of ambiguity while government policy is still being finalised, implying that the sector will likely continue building at pace regardless of the pending rules.
A call for a construction freeze
Not everyone shares that relatively relaxed outlook. Greens Senator Sarah Hanson-Young has taken a considerably more critical stance, calling for an outright moratorium on new data centre construction until the rules are finalised. Her argument centres on the practical toothlessness of non-retrospective legislation: rules that don’t apply to projects built in the interim, she argued, “are worthless” unless accompanied by a freeze on approvals and construction in the meantime.
Her position highlights the central tension running through the debate — between an industry eager to keep building at a rapid clip to meet surging demand (driven in large part by AI and cloud computing growth), and policymakers and advocates concerned that a 12–18 month regulatory gap could lock in years of inefficient energy and water use across a huge chunk of the country’s data infrastructure.
