Victorian Labor toes federal line on BYO renewables for data centres, Coalition still pushing gas

The Victorian Labor government says it will adopt the proposed federal Labor mandate and require future data centre developers to bring their own renewable energy and storage in order to connect to the state’s grid – if it is returned to power in the November election.

State premier Ben Carroll said on Tuesday that, if re-elected, his government will introduce a mix of federally mandated and state-specific regulations for new data centres, including the national guardrails on energy supply that were agreed to by all of Australia’s energy ministers, except for Queensland and the NT.

Victorian Labor says it will require future data centres to match new demand with new generation, as well as meet the costs of connection and network upgrades.

It will also require new centres to use only recycled or non-drinking water for cooling, ban new centres from being built in residential areas, set a 150 metre buffer from homes in industrial areas, and set requirements for community benefits and jobs training. 

And while the changes are not retrospective, Labor is promising more rules mandating “fair” community consultation and meeting existing noise, fire and safety requirements.

“In Victoria, we set the rules – data centres must power themselves, protect homes and pay their way,” Carroll said on Tuesday.

“If we get that right, we can all share in their economic benefits, especially the local community.”

In a statement, Carroll said the Coalition opposition had no plans to put in guardrails for big tech. “They’d let it rip,” he said.

Opposition energy spokesperson David Davis has responded by accusing the state government of failing to attach energy supply conditions to data centres until being directed to do so by federal Labor.

“Labor have been in power for 12 years and as with other obvious failings in the energy portfolio it is they who have botched the regulation of data centres,” Davis said in emailed comments sent to Renew Economy.

“It is Labor who has failed to ensure new energy supply has been attached to data centres.

“While data centres offer significant economic opportunity for the state these need to be balanced against protections for the community, for green wedges and support for ensuring energy costs do not keep rising as they have under Labor.”

The Coalition is promising to power Victoria with gas and fill the impending 1.45 gigawatt (GW) gap created by the closure of the Yallourn coal power station in 2028 with tenders for firmed electricity, mainly from gas.

It’s unclear what the party’s position is on the BYO renewables mandate for data centres, or some of the other proposed state regulations on how close data centres can be to homes and a mandate for community benefit payments. 

The federal government’s resolve on the AI energy mandate is already being tested by Queensland and the Northern Territory, which want to use gas to power new industries.

Initially, prime minister Anthony Albanese appeared to cave on allowing exceptions for the use of gas, before energy minister Chris Bowen promised “no carve outs” for the sector. 

The AI sector brought in $5.8 billion in capital spending to Victoria last year. 

While some members of the Victorian Labor government have previously suggested that the party doesn’t want to get in the way of that new income stream, it’s falling in line with the new federal direction and perhaps hearing the complaints of inner city residents.

The state’s growth and jobs minister Danny Pearson in January told the AFR that the government would deal with data centre development problems as they arose, but would not impose new regulations as the state sought to compete for business with New South Wales.

Around the world, countries are asking data centres to pay more for electricity than households or small businesses, to account for their inflexible 24/7 needs.

In Australia, NSW transmissions company Transgrid is pushing for a controversial rule change that would see large energy users pay for the full connection capacity, regardless of whether they use it or not.

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