On 23 March 2026, the Australian Government released its Expectations of data centres and AI infrastructure developers (Expectations), a key commitment under the Government’s National AI Plan published in December 2025.

For the first time, the Commonwealth has articulated clear national expectations for AI‑driven and energy‑intensive data centre developments. While the Expectations are not legally binding, the Government has made clear that alignment with them will underpin a project’s social licence to operate in Australia and will directly influence Commonwealth regulatory prioritisation.

What are the Expectations?

The stated objective of the Expectations is to incentivise investment in Australia while ensuring that data centre growth aligns with Australia’s national interests, environmental constraints and community expectations.

In practical terms, the Government is signalling that data centre developers must proactively demonstrate that their projects:

• deliver net benefits to Australia; and
• manage energy, water and community impacts without passing hidden costs onto consumers or local infrastructure.

The five Expectations are that data centre and AI infrastructure developers should:

1. prioritise Australia’s national interest;
2. support Australia’s energy transition;
3. use water sustainably and efficiently;
4. invest in Australian skills and the workforce; and
5. strengthen research, innovation and local capability.

Legal and approvals impact

The Expectations do not override existing Commonwealth, State or Territory laws. However, the Government has been explicit that proposals most closely aligned with the Expectations will be prioritised, and that energy‑intensive projects which are not aligned will not be prioritised in Commonwealth regulatory assessments.

In practice, this introduces a new approvals risk layer. Developers who cannot demonstrate alignment should expect increased scrutiny, slower approvals and greater engagement requirements at the Commonwealth level.

The Expectations apply to new or expanded developments, including co‑location facilities, hyperscale operations and large‑scale AI compute centres (described as “AI factories”). Small‑scale edge or on‑site enterprise data centres are generally excluded.

The green price tag

The most significant commercial implication of the Expectations is the Government’s position on energy use and water.

Data centres are now explicitly expected to:

• underwrite new and additional renewable energy generation and/or storage;
• avoid placing upward pressure on electricity prices;
• pay the full cost of required grid and water infrastructure, so those costs are not socialised; and
• support grid stability and demand‑flexibility outcomes.

Developers are also expected to adopt industry‑leading energy efficiency measures and to transparently report on water use.

As a result, site selection, grid access, water availability and community engagement will become even more critical during due diligence for developers. Early engagement with energy networks, water utilities, local communities and First Nations stakeholders is now essential.

While these requirements increase upfront obligations, they also create clear opportunities for collaboration between data centre developers, renewable energy proponents and infrastructure investors.

Supporting Australian opportunity

The Expectations also make it clear that data centre investment should deliver measurable Australian benefit, including:

• the creation of safe, well‑paid local jobs supported by training pathways and apprenticeships;
• providing Australian startups, small businesses, researchers and not‑for‑profits with access to compute on good terms; and
• deploying engineers and researchers in Australia to build long‑term domestic capability.

How we can help

HWLE Lawyers has extensive experience advising on data centre projects, renewable energy generation and network infrastructure.

If you would like to discuss how the Expectations may impact a proposed or existing development, please contact us.

This article was written by Matthew Powell, Partner, and Alex van Haandel, Associate.