On 23 March 2026, the Albanese Government released five overarching Expectations for data centres and AI infrastructure developers (the Expectations) aimed at incentivising investment in accordance with Australia’s national interests.[1]
In signalling national expectations tied to energy use, water, and domestic capability, the Commonwealth has moved beyond acknowledging data centre growth to actively shaping the conditions under which it will proceed.[2] To this end the Commonwealth has indicated that data centre proposals closely aligned with the Expectations will be prioritised in regulatory assessments.[3]
For new energy project developers, this shift carries direct commercial and regulatory significance. The projected scale of data centre energy demand presents a material new source of offtake for renewables and storage projects, while the intersection of the Expectations with the SOCI Act and evolving new energy regulatory framework creates a layered compliance environment that developers, investors and lenders need to navigate from the outset.
The Expectations and why they matter
While the Expectations do not establish a binding approval regime, they operate as a statement of national interest priorities under which project proponents can expect to be assessed across approval processes, social licence considerations, and lender and offtaker conditions.[4]
Adherence to the Expectations is therefore significant as they signal the direction in which the market is moving and the lens through which government, regulators, lenders and offtakers will assess project credibility. Importantly, the Expectations are not designed to curtail data centre development, but rather shape the conditions under which that development proceeds.
The Expectations include:
- prioritising Australia’s national interest;
- supporting Australia’s energy transition;
- using water sustainably and responsibly;
- investing in Australian skills and jobs; and
- strengthening research, innovations and local capability.[5]
Viewed collectively, the practical significance of the Expectations should not be understated. Data centres consumed approximately 4 TWh across the NEM in FY2025 and, under AEMO’s Step Change scenario, that figure is projected to reach approximately 21.4 TWh by 2034–35 (expected to be approximately 9% of the NEM’s grid-supplied electricity)[6]. Growth at this scale will materially reshape connection risk, network augmentation economics and clean energy contracting.
For new energy project developers, the “energy transition” Expectation is the most consequential of the five. In recognising that data centres must demonstrably support Australia’s energy transition, the Commonwealth has signalled that facility siting, grid capacity and resource sustainability (including water) will be assessed as threshold considerations. The practical effect is that data centre proponents will be directed toward locations with available grid capacity and proximate clean energy supply – creating a direct alignment between data centre demand and new energy project development.
That alignment is reinforced by the load profile of data centres. Unlike many large industrial loads, data centres draw consistent baseload energy with limited variability,[7] a demand profile closely analogous to the dispatchable capacity delivered by BESS. For developers already active in the storage sector, this presents a compelling case for co-locating BESS and generation assets adjacent to anticipated data centre load, ensuring both firmness of supply and enhanced project bankability.
In a market where generation and storage developers are actively seeking creditworthy offtakers to underwrite PPA commitments, the projected growth in data centre energy consumption constitutes a material new source of offtake demand. Developers who position their projects to service data centre load, through appropriate siting, connection capability and firmed supply, will be better placed to secure long-term offtake arrangements and, in turn, may attract project financing on favourable terms.
However, the regulatory considerations for data centre proponents extend beyond energy market dynamics. Where a data centre’s operations engage national security and critical infrastructure frameworks, a separate and cumulative layer of compliance obligations arises.
The critical infrastructure overlay
For data centres providing services to government or entities in regulated sectors, a distinct compliance consideration arises under the Security of Critical Infrastructure Act 2018 (Cth) (SOCI Act).[8] The threshold is whether a facility constitutes a “critical data storage or processing asset,”[9] capturing assets processing data for government entities or entities in regulated sectors including energy, communications, banking and health.[10] A data centre that meaningfully pursues the national interest and government-facing Expectations will almost by definition fall within SOCI scope. Once captured, obligations are cumulative and ongoing: registration, a written CIRMP addressing physical, personnel, cyber and supply chain risks, and incident reporting within strict timeframes.[11]
Conclusion
The Expectations, the SOCI Act and the broader energy regulatory framework do not operate in isolation – they represent converging regulatory signals that will collectively shape the conditions under which data centre development proceeds in Australia. As the Clean Energy Finance Corporation (CEFC) has observed, coordinated investment in renewables and storage can materially contain price impacts and offset incremental emissions from data centre load growth, reinforcing the commercial logic of early alignment with the Expectations.[12] The regulatory trajectory suggests a near-term shift toward soft, nationally consistent expectations shaping approvals and social licence, with more prescriptive obligations progressively emerging through SOCI controls and regulatory standards.
For developers, investors and transaction counterparties, a prudent near-term approach involves: (1) engaging with the Expectations as a project-shaping document rather than a compliance checklist; (2) prioritising connection performance standards across the project lifecycle; and (3) conducting SOCI applicability analysis and CIRMP readiness as an early diligence workstream, rather than a late-stage retrofit.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel or Adriaan van der Merwe
[1] Senator The Hon Tim Ayres, Minister for Industry and Innovation, the Hon Chris Bowen MP, Minister for Climate Change and Energy and Dr Andrew Charlton MP, Assistant Minister for Science, Technology and the Digital Economy, ‘Joint media release: An Australian approach to AI: Expectations for data centres that deliver for Australians’ (Media Release, 23 March 2026) <https://minister.dcceew.gov.au/bowen/media-releases/joint-media-release-australian-approach-ai-expectations-data-centres-deliver-australians>.
[2] Ibid
[3] Ibid.
[4] Ibid.
[5] Department of Industry, Science and Resources, ‘Expectations of data centres and AI infrastructure developers’ (Webpage, 23 March 2026) <https://www.industry.gov.au/publications/expectations-data-centres-and-ai-infrastructure-developers>.
[6] Australian Energy Market Operator, 2025 Electricity Statement of Opportunities (Report, August 2025) 29.
[7] Clean Energy Finance Corporation, Getting the Balance Right: Data Centre Growth and the Energy Transition (Report, December 2025) 20 <https://www.cefc.com.au/media/hs5ner3s/getting-the-balance-right-data-centres-and-the-energy-transition-full-report.pdf> (‘CEFC Report’).
[8] Security of Critical Infrastructure Act 2018 (Cth).
[9] Ibid s 12F(1)-(2).
[10] Ibid ss 12F(2)(b)(i), 8D.
[11] Ibid ss 23-24 (registration), 30AC, 30AH (CIRMP), 30BC (12-hour notification for critical cyber security incidents), 30BD.
[12] CEFC Report n 7, 33.
