MELBOURNE, AUSTRALIA / RankWire.AI / – The primary electricity market in Australia is anticipated to see a significant increase in power requirements as the development of data centers accelerates. The Australian Energy Market Operator reports that there are currently 225 data centre projects in the connection pipeline, a notable jump from 97 projects recorded a year earlier. Presently, approximately 165 data centres are operational across the National Electricity Market. Their electricity consumption is estimated at nearly 5 terawatt hours annually, which accounts for around 3% of the market’s total consumption.
AEMO forecasts that electricity usage by data centres will rise to roughly 34 TWh by 2035-36, increasing the sector’s share of the National Electricity Market’s total consumption to approximately 13%. Under a high-growth scenario, the demand could reach near 52 TWh within the same timeframe. The National Electricity Market encompasses eastern and southern regions of Australia, excluding Western Australia and the Northern Territory. These latest figures illustrate how rapidly large computing facilities have become a key source of new demand on the power grid.
Electricity consumption across the entire market is expected to grow substantially over the next decade. AEMO’s projections indicate annual use will rise from about 176 TWh in 2025-26 to around 250 TWh by 2035-36, representing an increase of over 40%. This growth is driven partly by the expansion of data centres, along with increased electrification within households, industries, and businesses. The forecasted 34 TWh of data centre energy demand approaches the combined electricity consumption of households in New South Wales and Victoria today.
Data centre expansion intensifies pressure amid aging power plants
Australia’s electricity grid must accommodate this growth while existing power stations are being phased out. Over the next ten years, about 15 gigawatts of coal and gas generation capacity will retire. Meanwhile, new generation and storage projects are coming online. During 2025-26, roughly 9.1 GW of new capacity was connected, setting a record for annual additions. Additionally, AEMO has identified approximately 40 GW of committed and planned generation and storage projects scheduled for delivery by the early 2030s.
The latest reliability assessment indicates there are no projected reliability shortfalls before 2030 under AEMO’s central scenario. This outcome is attributed to increased investments in generation, storage, and transmission infrastructure. It also highlights the importance of completing these projects on time, especially as older power stations are decommissioned. Reliability gaps serve as indicators for planning future supply, signaling where capacity may fall below required standards. It’s important to note that these gaps do not predict actual blackouts. AEMO continues to monitor demand growth in conjunction with evolving generation mixes across the market.
The government’s framework aims to address energy costs and grid stability
The federal government has introduced proposed national standards for large data centres, focusing on electricity supply, grid expenses, and water efficiency. The proposed framework would mandate that major facilities support new power generation efforts and share connection costs. It would also require large operators to reduce power consumption when necessary to support grid stability. Included in these standards are measures to enhance water efficiency. Legislation implementing these standards is targeted for early 2027, as the increasing demand for electricity from data centres becomes a more significant aspect of Australia’s overall energy planning.
Furthermore, the Australian Energy Market Commission has recommended new requirements for large data centres connecting to the grid. Their proposals emphasize the need for clean, reliable, and firmed electricity supply, along with increased flexibility in power consumption. The recommendations also cover market registration procedures, infrastructure costs, and the impact of large new loads on existing consumers. These suggestions are aligned with AEMO’s updated demand outlook. Collectively, the official analyses reveal a pipeline of data centres that has more than doubled in size, even as electricity use across Australia’s main power market continues to increase.