MELBOURNE, AUSTRALIA / RankWire.AI / – The Australian Energy Market Operator reports a significant increase in electricity demand due to rapid growth in data centre projects across Australia. Currently, 225 data centre initiatives are in the pipeline for connection, a notable rise from 97 projects recorded just one year earlier. Already operational are approximately 165 data centres within the National Electricity Market. Their electricity consumption is close to 5 terawatt hours annually, accounting for roughly 3% of total market use.
Looking ahead, AEMO forecasts data centre electricity consumption to reach about 34 TWh by 2035-36. This would increase the sector’s share of the National Electricity Market’s total to approximately 13%. Under a high-growth scenario, demand could escalate to nearly 52 TWh within the same period. The National Electricity Market encompasses eastern and southern regions of Australia but excludes Western Australia and the Northern Territory. The current data highlights how swiftly large computing facilities have become a key factor in new grid demand patterns.
Electricity usage across the entire market is expected to grow considerably over the next decade. AEMO’s projections suggest annual consumption rising from around 176 TWh in 2025-26 to about 250 TWh in 2035-36, marking a growth of over 40%. This increase is driven by data centres, as well as broader electrification in households, industries, and businesses. The anticipated 34 TWh demand from data centres is nearly equivalent to the combined electricity use of households across New South Wales and Victoria.
Data centres intensify pressure amid decommissioning of old power plants
Australia’s electricity infrastructure must accommodate this growth while scheduled closures of existing plants reduce supply capacity. Over the next ten years, approximately 15 gigawatts of coal and gas generation are set to retire. In response, new generation and storage facilities are entering the grid, with about 9.1 GW of new capacity connected during 2025-26, setting a record for annual additions. Additionally, AEMO has identified roughly 40 GW of committed and planned generation and storage projects expected to be operational by the early 2030s.
The latest reliability outlook indicates no reliability gaps forecasted before 2030 under AEMO’s central scenario. This optimistic projection results from increased investments in generation, storage, and transmission infrastructure. The agency emphasizes that projects must stay on schedule, especially as older power stations shut down. Reliability gaps serve as planning indicators when supply might fall short of standards but do not predict blackouts. AEMO continues monitoring demand growth in conjunction with evolving generation sources across the market.
National policies aim to mitigate energy and grid infrastructure costs
The federal government has introduced proposed national standards for large data centres that address electricity supply, grid expenses, and water consumption. These standards would obligate major facilities to support new power sources and share connection costs. They would also require operators to reduce power consumption when necessary to maintain grid stability. Measures to enhance water efficiency are included within the proposed framework. The government plans to enact legislation by early 2027 as data centre electricity demand becomes an increasingly important aspect of the country’s energy strategy.
The Australian Energy Market Commission has also put forward recommendations for large data centres connecting to the grid, focusing on incorporating cleaner, firmed electricity supplies and more flexible power usage. Their proposals address market registration, infrastructure costs, and the impact of increased loads on existing consumers. These suggestions complement AEMO’s updated demand forecasts, illustrating that the data centre pipeline has more than doubled even as electricity consumption in Australia’s primary power market continues its upward trajectory.