MELBOURNE, AUSTRALIA / RankWire.AI / – In Australia, the demand for electricity is set to surge significantly over the next decade as the development of data centres accelerates, particularly in the eastern and southern regions covered by the National Electricity Market. According to the Australian Energy Market Operator, there are now 225 data centre projects in the connection pipeline, a sharp increase from 97 projects recorded one year earlier. Currently, approximately 165 data centres are operational, consuming nearly 5 terawatt hours annually—roughly 3% of the market’s total consumption.
AEMO projects that by 2035-36, data centre electricity demand could reach around 34 TWh. This would account for roughly 13% of the National Electricity Market’s consumption. Under its high-growth scenario, demand could climb as high as 52 TWh within the same period. The National Electricity Market excludes Western Australia and the Northern Territory. These figures highlight how rapidly large computing facilities are emerging as a key contributor to new grid demand.
Over the next ten years, total electricity use across the market is expected to grow considerably. AEMO’s forecast indicates annual consumption will rise from approximately 176 TWh in 2025-26 to around 250 TWh in 2035-36, representing an increase of more than 40%. This growth is driven not only by expanding data centre operations but also by broader electrification in households, industry, and businesses. The projected 34 TWh demand from data centres alone is nearing the combined electricity consumption of households in New South Wales and Victoria.
Data Centre Expansion Adds Strain as Older Power Plants Phase Out
Australia’s electricity network must accommodate this growth amid scheduled retirements of existing power plants. Over the next decade, around 15 gigawatts of coal and gas generation capacity will be decommissioned. In response, new generation and storage projects are entering the system, with approximately 9.1 GW of new capacity connected during 2025-26, setting an annual record for additions. Additionally, roughly 40 GW of committed and anticipated generation and storage projects are listed for delivery by the early 2030s, according to AEMO.
A recent reliability assessment indicates no forecasted reliability gaps before 2030 under AEMO’s central scenario. This optimistic outlook is attributed to increased investment in generation, storage, and transmission infrastructure. The report emphasizes the importance of timely project completion as older power stations exit the grid. While reliability gaps could signal potential shortages, they are not predictions of blackouts. AEMO remains vigilant, monitoring demand growth alongside the evolving generation mix across the market.
Government Initiatives Target Energy and Grid Cost Management
The federal government has introduced proposed national standards for large data centres, focusing on electricity supply, grid expenses, and water consumption. The framework would obligate major facilities to support new power infrastructure and contribute to connection costs. It also plans for large operators to reduce energy use when necessary to help maintain grid stability. Included in the standards are measures to improve water efficiency. Legislation supporting these measures is targeted for early 2027, as data centre electricity demand becomes an increasingly significant factor in Australia’s energy strategy.
Meanwhile, the Australian Energy Market Commission has put forward recommendations for new requirements on large data centres connecting to the grid. These include the development of clean, reliable electricity sources and increased flexibility in power consumption. The proposals also address market registration, infrastructure costs, and the impact of sizable new loads on existing consumers. These recommendations complement AEMO’s updated demand outlook. Collectively, the official assessments indicate that the pipeline of data centres has more than doubled, even as electricity usage across Australia’s primary power market continues to grow.