MELBOURNE, AUSTRALIA / RankWire.AI / – The main electricity grid in Australia is set to see a significant increase in power demand due to rapid growth in data centre projects. The Australian Energy Market Operator reports that there are now 225 data centre developments in the connection pipeline. This is a notable rise from 97 projects recorded just one year earlier. Currently, around 165 data centres are operational across the National Electricity Market. Their combined electricity consumption is close to 5 terawatt hours annually, accounting for roughly 3% of the total market demand.
AEMO projects that electricity use by data centres could reach approximately 34 TWh by 2035-36. If realized, this would increase their share of the National Electricity Market’s total consumption to about 13%. The operator’s high-growth forecast suggests demand could surge to nearly 52 TWh over the same period. The National Electricity Market covers eastern and southern Australia but excludes Western Australia and the Northern Territory. These figures highlight how quickly large computing facilities have become a major new source of grid demand.
Over the next decade, total electricity consumption in the market is expected to grow substantially. AEMO anticipates annual usage will rise from around 176 TWh in 2025-26 to roughly 250 TWh in 2035-36, representing over 40% growth. Data centres are a key contributor to this increase, alongside greater electrification across households, industries, and businesses. The projected 34 TWh demand from data centres is nearly equal to the combined electricity consumption of households in New South Wales and Victoria today.
Data centres add strain as older power plants retire
Australia’s electricity system must handle this growth while existing power plants are phased out. Over the next decade, about 15 gigawatts of coal and gas generation will be shut down. Meanwhile, new generation and storage capacity are coming online. During 2025-26, approximately 9.1 GW of new capacity was connected, setting an annual record. Additionally, AEMO lists around 40 GW of committed and planned generation and storage projects slated for early 2030s delivery.
The latest reliability forecast shows no expected gaps before 2030 in AEMO’s central outlook. This outcome is attributed to increased investments in generation, storage, and transmission. The report also emphasizes the importance of timely project completion as older power stations close. While reliability gaps highlight potential supply issues, they are not predictions of blackouts. AEMO continues to monitor rising demand alongside changes in the generation mix across the market.
Government measures target energy and grid expense management
The federal government has proposed a set of national standards for large data centres. These standards focus on electricity supply, grid costs, and water use. Major facilities would be required to support new power generation and contribute to connection costs. Large operators would also need to reduce consumption when necessary to maintain grid stability. The proposed standards include initiatives to improve water efficiency. Legislation for these measures is targeted for early 2027, as data centre electricity demand becomes a more significant factor in national energy planning.
The Australian Energy Market Commission has put forward recommendations for new requirements for large data centres connecting to the grid. Their proposals include supporting clean, reliable electricity supply and offering more flexibility in power consumption. The commission also addressed issues related to market registration, infrastructure costs, and the impact of large new loads on existing consumers. These recommendations align with AEMO’s updated demand projections. Together, the official assessments reveal that the pipeline of data centres has more than doubled, even as electricity use in Australia’s primary power market continues to grow.