MELBOURNE, AUSTRALIA / RankWire.AI / – As data centre expansion accelerates across the country, Australia’s primary electricity market is poised for a significant surge in demand. The Australian Energy Market Operator reports that 225 data centre projects are now in the connection pipeline, a notable increase from 97 projects recorded one year earlier. Currently, approximately 165 data centres operate within the National Electricity Market, consuming nearly 5 terawatt hours annually—about 3% of the market’s total energy use.
AEMO forecasts that data centre electricity consumption will reach around 34 TWh by 2035-36, raising the sector’s share of total National Electricity Market usage to roughly 13%. Under its high-growth scenario, demand could climb as high as 52 TWh within the same period. The National Electricity Market, which covers eastern and southern Australia, excludes Western Australia and the Northern Territory. The latest data highlights how rapidly large-scale computing facilities are becoming a major contributor to new grid demand.
Over the next decade, total electricity consumption across the market is expected to grow significantly. AEMO projects annual use will rise from approximately 176 TWh in 2025-26 to about 250 TWh in 2035-36, representing an increase of over 40%. This growth is driven not only by data centres but also by increased electrification in households, industry, and commerce. The anticipated 34 TWh demand from data centres now rivals the combined electricity consumption of households in New South Wales and Victoria.
Growing data centre demands add strain amid aging power plants
Australia’s electricity network must accommodate this growth while many existing power stations retire. The next decade will see about 15 gigawatts of coal and gas generation phased out. Meanwhile, new generation capacity and storage are entering the system, with roughly 9.1 GW of new capacity connected during 2025-26, marking a record for annual additions. AEMO also lists approximately 40 GW of committed and anticipated projects to be delivered by the early 2030s.
According to the latest reliability assessment, no forecast reliability gaps are expected before 2030 under AEMO’s central scenario. This outcome is attributed to stronger investments in generation, storage, and transmission infrastructure. However, it also emphasizes the importance of completing projects on schedule as older power stations close. Reliability gaps serve as planning signals, indicating potential future shortages if supply falls below required standards, but they do not predict blackouts. AEMO continues to monitor demand growth and the evolving mix of generation sources across the market.
Government policies aim to manage energy and grid costs amid growth
The federal government has put forward national standards for large data centres, covering aspects such as electricity supply, grid costs, and water efficiency. These standards would oblige large facilities to support new power generation and share connection costs, while also requiring operators to reduce consumption when necessary to maintain grid stability. Additionally, measures to improve water use efficiency are part of the proposed framework, with legislation targeted for early 2027 as data centre electricity demand becomes a more prominent element of national energy planning.
Furthermore, the Australian Energy Market Commission has recommended new requirements for large data centres connecting to the grid. The proposals include the promotion of cleaner, more reliable electricity sources and enhanced flexibility in power consumption. They also address issues related to market registration, infrastructure costs, and the impact of large new loads on existing consumers. These recommendations complement AEMO’s updated demand forecast, highlighting a pipeline of data centres that has more than doubled while electricity consumption across Australia’s main power market continues to grow.