MELBOURNE, AUSTRALIA / RankWire.AI / – As data centre development accelerates, Australia’s primary electricity market is expected to see a significant surge in power demand. The Australian Energy Market Operator reports that there are currently 225 data centre projects in the connection pipeline, a notable increase from 97 projects just one year earlier. Currently, approximately 165 data centres are operational across the National Electricity Market, with their electricity consumption nearing 5 terawatt hours annually, representing about 3% of the market’s total usage.
Forecasts from AEMO project that electricity consumption by data centres could reach around 34 TWh by 2035-36, which would increase their share of the National Electricity Market’s total to roughly 13%. Their high-growth scenario anticipates demand approaching 52 TWh within the same timeframe. The National Electricity Market, which covers eastern and southern Australia, excludes Western Australia and the Northern Territory. The latest data highlights how quickly large computing facilities have become a significant contributor to new grid demand.
During the next decade, total electricity consumption across the market is also expected to grow substantially. AEMO’s projections indicate annual usage will rise from approximately 176 TWh in 2025-26 to about 250 TWh by 2035-36, marking a growth of over 40%. This increase is driven partly by the expansion of data centres and partly by increased electrification across households, industries, and businesses. The anticipated 34 TWh demand from data centres now rivals the electricity used collectively by households in New South Wales and Victoria.
Growing Data Centre Power Needs Add Stress as Older Plants Exit
Australia’s electricity system must adapt to this growth while existing supply diminishes due to scheduled plant closures. Over the next decade, about 15 gigawatts of coal and gas generation will retire. Simultaneously, new generation and storage projects are coming online, with approximately 9.1 GW of new capacity connected during 2025-26, setting an annual record for additions. AEMO’s list of committed and planned projects includes roughly 40 GW of generation and storage facilities expected to be operational by the early 2030s.
The latest reliability assessment indicates no forecasted reliability gaps before 2030 under AEMO’s central scenario. These results are attributed to increased investment in generation, storage, and transmission infrastructure. AEMO emphasizes that timely project delivery is crucial as older power stations are phased out. While reliability gaps are signals indicating potential supply shortfalls, they do not predict blackouts. The agency continues to monitor demand growth in tandem with the evolving generation mix across the market.
Government Initiatives Address Energy and Infrastructure Costs
The federal government has introduced proposed national standards for large data centres that encompass electricity supply, grid costs, and water use. These standards would require major facilities to support new power sources and contribute to connection expenses. Additionally, they mandate large operators to curtail consumption when necessary to maintain grid stability. The proposed framework also includes measures aimed at enhancing water efficiency. Legislation implementing these standards is targeted for early 2027, as data centre electricity demand becomes a more prominent component of national energy planning.
The Australian Energy Market Commission has also put forward recommendations for new requirements for large data centres connecting to the grid. These proposals advocate for cleaner, more reliable electricity supply and increased flexibility in power consumption. The commission’s suggestions address issues related to market registration, infrastructure costs, and the impact of substantial new loads on existing consumers. These recommendations accompany AEMO’s updated demand outlook, collectively illustrating a pipeline of data centre projects that has more than doubled while electricity usage across Australia’s main power market continues its upward trajectory.