Fast-tracked AI data centres subject to tough new guidelines in NSW

Builders of data centres in NSW will be subject to new water and energy standards aimed at ensuring the controversial sector does not hurt local communities, the state government said.

Under the policy framework, builders will have “clear expectations” on energy, water and environmental standards, community consultation and infrastructure contributions to access fast-tracked assessment, Environment Minister Penny Sharpe said in a statement.

Alongside the plan, the state’s independent pricing regulator would review how much data centres were charged for water, while the Office of AI would continue to look at public investment to support artificial intelligence , the government said.

Monday’s announcement comes amid growing concerns about data centres, especially in some areas of Sydney where the large, windowless and energy-intensive buildings are being built close to homes.

Sharpe said as demand for data centres increased in NSW, the government would ensure supporting infrastructure kept pace.

“These reforms will make sure data centre growth drives investment in renewable energy, while holding operators to the highest air quality standards,” she said.

Planning Minister Paul Scully said the guidelines balanced “maintaining strong environmental standards to safeguard our water and energy future while supporting faster and more certain planning assessments”.

They “provide clear expectations, improving transparency and providing certainty for both communities and investors,” Scully said.

There are 19 data centre projects valued at around $50 billion in the State Significant Development pipeline - an accelerated process for large builds determined by the planning minister or Independent Planning Commission, instead of local councils.

More than 60 data centres are already operating, or under construction, across the state.