NSW, Australia Sets Six Principles for Construction and Operation of Data Centres 
On August 17, 2026, the state of New South Wales (NSW), Australia, issued the NSW Data Centre Policy Framework and Guidelines (hereafter, “the Guidelines”). The Guidelines outline six principles for data centre development projects, including improving environmental performance and investing in additional water and energy supply. Developers that comply with these principles can benefit from streamlined processes, such as having their development applications assessed within 75 days.
Six Principles for Data Centre Development
The Guidelines set out the following six principles:
- Apply world-class environmental and efficiency standards.
- Impose no net cost on consumers or local communities.
- Fund additional water and energy supply.
- Enhance local community infrastructure and amenity.
- Invest in future industries across the supply chain.
- Demonstrate a commitment to training and skills to support jobs.
Details of Principle 1: Environmental and Efficiency Performance Standards
Under Principle 1, the Guidelines specify eight performance criteria:
Design targets for PUE (Power Usage Effectiveness) and WUE (Water Usage Effectiveness)
Based on annual average climate data and assuming 100% IT load, data centres must meet one of the following design targets:
- dPUE ≤ 1.25 and dWUE ≤ 1.0 (potable water) or dWUE ≤ 1.6 (non-potable water), or
- dPUE ≤ 1.3 and dWUE ≤ 0.44.
Use of recycled water in high‑consumption cooling systems
For open-loop water-cooled systems such as evaporative or adiabatic cooling, operators must either use recycled water for 100% of cooling operations or establish a clear agreement with the water utility on transitioning to rainfall‑independent water sources. They must also ensure that agricultural water use in farming regions is not adversely affected.
Interim design measures for drought-related water restrictions
Data centres that temporarily rely on potable water until recycled water becomes available must incorporate systems—such as hybrid cooling—that allow water use to be reduced during drought-related supply restrictions.
Limits on air pollutant emissions from diesel backup generators
Facilities must meet health-based air quality standards and comply with Group 6 emission limits (NOx, particulate matter, VOCs, CO) under NSW’s Protection of the Environment Operations (Clean Air) Regulation 2022. For certain non-urban locations, US EPA Tier 2 standards (40 CFR Part 1039, Table 2 to Appendix I) may be applied, subject to an impact assessment.
Noise and vibration impact assessments
Qualified acoustic consultants must prepare quantitative noise and vibration assessments for both construction and operational phases, in accordance with NSW EPA guidelines and Australian Standards.
Management of fire and explosion risks
Operators must demonstrate appropriate risk assessments and design controls for hazards associated with large diesel fuel storage, lithium-ion batteries, and complex electrical works. Compliance with NSW Fire and Rescue guidance (e.g., Lithium-ion batteries and diesel generators in data centres, Fire Safety Studies) and SafeWork regulations is required.
Provision of demand and usage forecasts during planning
To support infrastructure planning, developers must provide maximum and average water and electricity demand forecasts during the planning process. These data will be treated as confidential.
Installation of smart meters
Data centres must install electricity and water smart meters that meet operator specifications and support NSW Government infrastructure planning.
Current Status of Data Centre Development in NSW
According to the NSW Government, more than 60 data centres are currently operating or under construction in the state. An additional 19 projects are included in the State Significant Development pipeline, with a combined value of AUD 50.3 billion.
Related Links
- NSW Data Centre Guidelines (PDF): https://www.infrastructure.nsw.gov.au/media/4jlictae/id0073_nsw-data-centre_guidelines.pdf
- NSW Government press release on the Guidelines: https://www.infrastructure.nsw.gov.au/news/nsw-releases-data-centre-policy-framework-and-guidelines/
