A controversial data centre plan in a Sydney suburb has been withdrawn, with the developer citing changes in the “policy and regulatory environment” for large-scale facilities.

Local residents and campaigners had pushed back against the “Project Mars” development in the Lane Cove suburb, pointing out that the 90-megawatt facility would be located near homes, schools, event spaces and green spaces.

The development was one of the factors spurring the federal government’s rules outlined in July intended to address growing concerns around data centres’ location choices and their use of energy and water.

The rules are expected to be introduced to the federal parliament in 2027.

In a letter to the New South Wales planning authority, developer Goodman Group, the country’s largest property firm, said that since it began the planning process in March of last year, “the policy and regulatory environment for large-scale data centre development has evolved significantly”.

It said it had considered these changes, along with the “views of the local community”, and had decided not to proceed with the development.

In a message to the Lane Cove Responsible Planning Group, Anthony Roberts, a member of the New South Wales Legislative Assembly representing Lane Cove, said the development was a “common-sense win” for the community.

He said it sent a message to developers to “find suitable locations before putting proposals forward”.