Citing outages caused by data centres in the United States and Ireland, the Australian Energy Market Commission wants the power-hungry facilities capable of riding out grid disturbances issue-free.
Australia has become a favoured destination for data centres to accommodate the world's growing digital footprint and appetite for artificial intelligence.
The country currently sports the second-biggest investment pipeline in the world and data centre energy use is set to climb from two per cent of domestic annual consumption to 12 per cent by 2050.
Federal policymakers are conscious of the energy and water usage associated with infrastructure and are preparing frameworks as part of the National AI Plan.
The recommended rule changes should prevent data centres unplugging simultaneously during a voltage dip and causing network instability, the commission said.
Two years ago, 60 data centres in Virginia pulled 1500MW off the grid at the same time during a single fault, forcing operators to take emergency action to avoid widespread blackouts.
Ireland has gone as far as placing moratoriums on new data centres due to network disruptions.
Australian Energy Market Commission chair Anna Collyer said such incidents could cost consumers billions of dollars in lost electricity supply and emergency network upgrades.
"Data centres aren't passive loads anymore - they're active grid participants," she said.
"When they fail to ride through faults, it has the potential to trigger cascading failures and blackouts."
The proposed changes would prevent stability issues without blocking investment in the sector, she said.
"Data centre operators would know exactly what's required up front."
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