Australian National Expectations for the development of data centres and AI infrastructure – what you need to know

In brief

• The Australian Government has released its Expectations of data centres and AI infrastructure developers, setting out five national expectations that will guide approvals and regulatory prioritisation for new and expanded data centre developments in Australia.
• The expectations are intended to underpin the sector’s “social licence to operate”, particularly in light of rapidly growing demand for AI‑driven compute and energy‑intensive infrastructure. 
• While the expectations do not create new legal obligations, proposals that closely align with them will be prioritised through Commonwealth regulatory processes, with implementation expected to occur in coordination with states, territories and energy market bodies. 

Background

On 23 March 2026, the Australian Government released the Expectations of data centres and AI infrastructure developers (Expectations) as part of its broader National AI Plan and digital infrastructure agenda. 

The expectations respond to accelerating global investment in data centres and AI compute, and the increasing strain that large, energy‑intensive facilities can place on electricity grids, water resources and local communities. The Government has framed the Expectations as a mechanism to ensure that future growth in data centre capacity delivers clear national benefits, while supporting Australia’s clean energy transition and long‑term resilience.

The Expectations apply to new or expanded data centre and AI infrastructure developments in Australia, including hyperscale facilities and large‑scale AI compute centres. They do not apply to small‑scale edge or on‑site enterprise data centres – Government did not give any reasons for their exclusion. 

What are the Expectations?

The Expectations are structured around five core pillars:

1. Prioritising Australia’s national interest
   Developers are expected to operate in ways that support Australia’s national security, data sovereignty and economic interests, including by protecting sensitive and personal data, engaging constructively with communities, and maintaining a strong social licence to operate.
2. Supporting Australia’s energy transition
   AI infrastructure and new data centres should avoid increasing energy costs and are expected to support the shift toward sustainable energy. This includes funding new and additional clean energy generation or storage, operators paying their share of grid connection and transmission costs, adopting industry‑leading energy efficiency measures, and supporting grid stability through demand flexibility. 
3. Sustainable and efficient water use
   Operators are expected to minimise water consumption through efficient cooling technologies, use of non‑potable water where possible, and early engagement with water utilities, communities and First Nations peoples. Transparent reporting on water use and resilience planning is also expected.
4. Investment in Australian skills and jobs
   The Expectations emphasise the creation of fair, secure and well‑paid jobs, along with investment in training, apprenticeships and workforce development to address skills gaps across construction and ongoing operations.
5. Research, innovation and local capability
   Large‑scale compute providers, including hyperscalers, are expected to support Australia’s local innovation by enabling access to compute for start‑ups, researchers and not‑for‑profits, deploying engineers and researchers locally, and investing in Australian supply chains.

Application of Expectations and likely next steps

The Expectations do not replace existing laws or create new regulatory obligations. Instead, they will operate as a policy lens through which Commonwealth regulatory assessments and investment facilitation decisions are prioritised. Proposals that align closely with the Expectations are more likely to receive coordinated and timely regulatory consideration although, at this stage, it is unclear how that will be implemented. 

The Government has indicated it will work with states and territories, as well as energy market bodies, particularly through the Energy and Climate Change Ministerial Council, to embed the Expectations into approval, planning and connection processes. No timing for these changes has been given at this stage.

In practical terms, proponents of hyperscale facilities and large‑scale AI compute centres should expect increased scrutiny of:

• energy sourcing and grid impacts;
• water security and efficiency strategies;
• community engagement and local benefit sharing; and
• contributions to Australian skills, innovation and research capability.

Industry responses and commentary

In their response to the Expectations, Data Centres Australia (DCA), the dedicated peak body for data centres in Australia, acknowledged the importance of sustainability leadership and national interest considerations. DCA has expressed concern that the Expectations apply only to new or expanded developments, even though existing on‑site and enterprise data centres account for a significant proportion of Australia’s computing capacity.

DCA argued that many older enterprise facilities are materially less energy‑efficient than modern, purpose‑built data centres, and that excluding these facilities risks missing opportunities to improve overall system efficiency and emissions outcomes. Broadly, DCA considers that a more holistic policy approach would better reflect the realities of Australia’s existing digital infrastructure footprint.

Industry generally has welcomed the Government's Expectations as a long-overdue signal of policy intent and have flagged the need for continued engagement with Government at all levels as they move from principle to practice, to ensure that Australia will attract global capital, create jobs and build the backbone for the digital economy.

What this means for developers and investors

For developers, operators and investors, the Expectations signal a clear shift in the approval and investment landscape for data centres and AI infrastructure in Australia. 

Early alignment with the Expectations, particularly through credible energy and infrastructure strategies, is likely to become a key differentiator as governments seek to balance rapid digital growth with affordability, sustainability and national interest objectives.