MELBOURNE, AUSTRALIA / RankWire.AI / – The main electricity market in Australia is expected to see a significant surge in energy consumption driven by rapid growth in data centre development. The Australian Energy Market Operator reports that 225 data centre projects are currently in the connection pipeline, a notable rise from 97 projects recorded a year earlier. Currently, approximately 165 data centres are operational across the National Electricity Market, with their electricity consumption nearing 5 terawatt hours annually, which accounts for about 3% of the market’s total usage.
AEMO predicts that the sector’s electricity use from data centres will escalate to roughly 34 TWh by 2035-36, increasing their share of the National Electricity Market’s consumption to around 13%. Under a high-growth scenario, the demand could reach about 52 TWh over the same period. The National Electricity Market, covering eastern and southern Australia, does not include Western Australia or the Northern Territory. These figures highlight how quickly large computing facilities have become an important factor in new grid demand.
Electricity consumption across the entire market is projected to grow substantially over the next decade. AEMO forecasts annual usage rising from around 176 TWh in 2025-26 to approximately 250 TWh by 2035-36, marking an increase of more than 40%. This growth is driven by data centres along with increased electrification in households, industries, and commercial sectors. The expected 34 TWh demand from data centres is nearly equivalent to the combined electricity consumption of households across New South Wales and Victoria.
Data centre expansion heightens pressure amid aging power plants
Australia’s electricity grid must accommodate this growth while existing generation assets are phased out. Over the next decade, about 15 gigawatts of coal and gas capacity are scheduled to retire. Meanwhile, new generation and storage solutions are coming online, with approximately 9.1 GW of capacity connected during 2025-26, setting a record for annual additions. AEMO also lists roughly 40 GW of committed and planned generation and storage projects scheduled for delivery by the early 2030s.
The latest reliability assessment indicates no anticipated reliability gaps before 2030 under AEMO’s central forecast. This outcome is linked to increased investments in generation, storage, and transmission infrastructure. The report emphasizes that projects must proceed on schedule as older power stations close. While reliability gaps serve as indicators of potential supply shortfalls, they do not predict blackouts. AEMO continues to monitor demand growth and the evolving generation mix across the market.
The government’s framework aims to address energy and grid costs
The federal government has put forward proposed national standards for large data centres, covering electricity supply, grid charges, and water consumption. These standards would require major facilities to support new power generation and contribute to connection costs. Additionally, large operators would be obligated to reduce consumption when necessary to help maintain grid stability. The proposed regulations also include measures to enhance water efficiency. The government aims to introduce legislation by early 2027 as data centre electricity demand increasingly influences national energy planning.
The Australian Energy Market Commission has also recommended new requirements for large data centres connecting to the grid. Its proposals include sourcing cleaner, more reliable electricity and increasing flexibility in power usage. The commission’s suggestions address market registration, infrastructure costs, and the impact of large new loads on existing consumers. These recommendations complement AEMO’s updated demand outlook. Together, the official assessments reveal a pipeline of data centres that has more than doubled, even as electricity consumption across Australia’s main power market continues its upward trajectory.