MELBOURNE, AUSTRALIA / RankWire.AI / – In Australia, the country’s primary electricity market is on track for a notable increase in energy demand driven by a rapid expansion of data centre infrastructure. The Australian Energy Market Operator reports that 225 data centre projects are currently in the connection pipeline, a significant rise from 97 projects recorded just one year prior. Presently, approximately 165 data centres are operational across the National Electricity Market, consuming nearly 5 terawatt hours annually, which accounts for about 3% of the market’s total consumption.
Looking ahead, AEMO predicts that electricity used by data centres will climb to roughly 34 TWh by 2035-36, raising their share of the National Electricity Market’s total to approximately 13%. Under their high-growth scenario, demand could reach close to 52 TWh during the same period. The National Electricity Market encompasses eastern and southern Australia but excludes Western Australia and the Northern Territory. These figures underscore how rapidly large-scale computing facilities are becoming a prominent source of new load on the grid.
Additionally, the total electricity consumption within the market is expected to grow significantly over the next decade. AEMO’s forecasts indicate annual usage increasing from about 176 TWh in 2025-26 to nearly 250 TWh in 2035-36, representing growth of over 40%. This rise is driven partly by the expansion of data centres, but also by increased electrification across households, industries, and businesses. The projected demand of 34 TWh from data centres now rivals the combined electricity consumption of households in New South Wales and Victoria.
Data centres intensify pressure amid retiring older power plants
Australia’s electricity network must accommodate this rising demand while existing supply diminishes due to scheduled plant closures. Over the coming decade, approximately 15 gigawatts of coal and gas generation will be phased out. At the same time, new generation and storage capacity are entering the system, with around 9.1 GW connected during 2025-26, setting an annual record for additions. Furthermore, AEMO has identified about 40 GW of committed and anticipated projects for generation and storage expected to come online by the early 2030s.
The latest reliability assessment indicates that no reliability gaps are forecast before 2030 under AEMO’s central outlook. The agency attributes this to increased investments in generation, storage, and transmission infrastructure. It emphasizes, however, that timely project completion is crucial as older power stations retire. While reliability gaps serve as indicators for potential shortfalls in supply, they do not predict blackouts. AEMO continues monitoring demand growth alongside the evolving generation mix across the market.
Government initiatives target energy costs and grid stability
At the federal level, proposals for national standards aim to regulate large data centres concerning electricity provision, grid expenses, and water consumption. This framework would obligate major facilities to support new power sources and contribute to connection costs. Additionally, large operators would be required to curtail consumption when necessary to maintain grid stability. The standards also include measures to enhance water efficiency. Legislation implementing these standards is targeted for early 2027, as data centre electricity demand increasingly influences national energy planning.
Furthermore, the Australian Energy Market Commission has proposed new requirements for large data centres connecting to the grid. These include the need for cleaner, more reliable electricity supply and increased flexibility in power usage. The commission’s recommendations also address market registration, infrastructure costs, and the effects of sizable new loads on existing consumers. These proposals complement AEMO’s updated demand outlook, revealing a pipeline of data centres that has more than doubled even as electricity consumption across Australia’s main power market continues to grow.