AI Data Centre Standards: The 3.38 GW Blind Spot

Australia's AI data centre standards will be legislated by early 2027. The projects they were written to discipline are already approved, mostly already funded, and exempt.

ABC News did the arithmetic on 10 September. Twenty-seven data centres are approved or in construction, and the approved but unbuilt ones add up to at least 3.38 gigawatts of capacity. The country's entire installed base is 1.5 GW across 162 facilities, according to the Data Centre Australia report the ABC cited, measured in March. The pipeline that escapes the new rules is more than double everything already humming.

Nobody had to hunt for a loophole. The Prime Minister said it straight on ABC Radio Sydney: the AI data centre standards will not apply to projects already approved or under construction. "You can't retrofit," he said.

The rulebook is real. So is the sequencing

The consultation paper landed this month. It is called "Getting it right: Building AI infrastructure that works for Australia," it comes out of the Department of the Prime Minister and Cabinet, and submissions close on 9 October. It defines a large data centre as 30 MW of design capacity or more, and proposes five mandatory requirements: contribute positively to the energy transition, minimise water use, impose no net costs on consumers and communities, engage meaningfully with local councils and communities, and build skills and training.

It builds on the expectations document from March and the National Cabinet decision of 26 August. It also says plainly that the standards will complement state and territory planning processes rather than duplicate them. Commonwealth Bank puts the investment opportunity at around $150 billion by 2030, and the paper quotes that figure without arguing with it.

The intent is clear. The arithmetic is not. The pipeline the rules exempt is the reason the arithmetic matters.

What 3.38 gigawatts looks like on a map

AirTrunk's SYD3 at Huntingwood, 400 MW plus for the campus. Project Blue Tongue, also known as SYD067, at Wetherill Park, 160.85 MW maximum facility power. AWS's 43-61 Turner Road at Gregory Hills, 61.7 MW approved. Project Echidna at Eastern Creek, 35.2 MW. Apollo Place at Lane Cove West, up to 45 MW. NEXTDC's S4, under construction in western Sydney, 365 MW. Goodman's Project Apollo, five storeys in Sydney's north, approved in the first week of September, two years to build, and one of the largest in the country by computing capacity if it were switched on today.

Most sit in New South Wales and Victoria, in western Sydney and on Melbourne's fringe, with a second cluster chasing wind, solar and batteries in the regions. RenewMap's Alex Thompson, who verified the ABC's analysis with CBRE, said the pipeline accelerated in recent months and that not all of it will be built.

That caveat is doing a lot of quiet work. Plenty of these projects may never close financing. The ones that do are precisely the cases the national standard was designed to catch, and they will be operating before the standard exists.

Water was the argument, so watch the number

The water requirement is the sharpest of the five, and the industry's answer is already rehearsed. Data Centres Australia's chief executive Belinda Dennett said members "will continue to meet those requirements until the new rules are in force," then added that they "cannot comply with something that isn't yet established or even articulated." Both halves are true. Neither one is a threshold.

The technical defence is real. In a direct-to-chip, closed-loop, non-evaporative design the loop is filled once and then recirculates as a sealed system, which is how Oracle describes the cooling in its newest AI data centres, with ongoing community water use effectively zero. CDC's own account is that it has built closed-loop liquid cooling into every facility since it started in 2007, designed for high-density compute without ongoing water consumption or evaporation.

So which number applies depends entirely on the design. In August I made the case that closed-loop cooling becomes the default once water gets priced into approvals.

That is also the problem. "Minimise water use" stays a direction rather than a standard until somebody publishes litres per megawatt hour of IT load by cooling architecture and requires a developer to prove which system they built. Apply the new rules only to what comes after them and 3.38 GW never has to prove it at all.

The states will carry what the Commonwealth exempts

New South Wales has already attached water and energy conditions to individual approvals, including Goodman's Project Apollo. State planning authorities hold the pen right now, and they write requirements into consents because they have to answer to the people next door.

The politics keeps moving anyway. Greens senator Sarah Hanson-Young is pushing for a moratorium on construction and has argued the rules must be retrospective or "they're worthless." Two federal parliamentary inquiries, one into data centres and one into AI, report later this year. The legislation is targeted for early 2027.

Anyone who has watched planning reform in this country knows the sequence. Consultation, exposure draft, passage, guidance, then years of argument about what "minimise" meant. Connection works get energised while that argument runs.

Ashurst Perkins Coie's Kate Muller told the ABC that the uncertainty is not deterring investors, and pointed to Australia's security settings and the familiarity of the policy environment as the draw. She is probably right, and it is also the honest read of what happens next: this pipeline gets built under state planning rules written before AI load existed, whatever gets passed in 2027.

What to model if you are building

Assume the standard arrives after you, then design as if it already applies. The states are writing conditions into consents now. An asset that needs retrofit capital in 2029 is worth less than one that does not.

Get your water number before a council asks for it. Litres per megawatt hour, by cooling architecture, with the source of the makeup water named. "Minimal water use" will not survive a submission once the threshold lands.

Check the 30 MW line that decides who is captured. A campus that is 29 MW in the application and 45 MW at the meter is a drafting problem waiting to happen.

And the approvals bottleneck has not gone anywhere. I wrote last week about why approvals, not power, are the constraint now, and the federal standard adds a second queue on top of the first.

Australia has decided it wants AI infrastructure on its own terms. The terms are being written in public, and the largest part of the build has already signed off on a different set.

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