MELBOURNE, AUSTRALIA / RankWire.AI / – The expansion of data centres in Australia is set to drive a 40% increase in the country’s total electricity consumption over the next decade. The Australian Energy Market Operator reports that 225 data centre projects are now in the connection pipeline, a significant rise from 97 projects just a year earlier. Currently, approximately 165 data centres are operational across the National Electricity Market, consuming nearly 5 terawatt hours annually, which accounts for about 3% of market usage.
Forecasts from AEMO indicate that data centre electricity consumption could reach around 34 TWh by 2035-36, increasing the sector’s share of the National Electricity Market’s total to roughly 13%. Under a high-growth scenario, this demand could rise to nearly 52 TWh within the same timeframe. The National Electricity Market, which encompasses eastern and southern Australia, excludes Western Australia and the Northern Territory. These figures highlight how rapidly large computing facilities have become a notable driver of new grid demand.
Over the next ten years, overall electricity use in the market is expected to grow significantly. AEMO’s projections suggest annual consumption rising from approximately 176 TWh in 2025-26 to around 250 TWh in 2035-36, representing an increase of more than 40%. This growth is driven not only by data centres but also by increased electrification across households, industry, and businesses. The projected 34 TWh of data centre demand nearly matches the combined electricity consumption of households in New South Wales and Victoria.
Increasing Data Centre Load Adds Strain Amidst Retirement of Old Generators
Australia’s electricity system faces the challenge of accommodating this growth while existing power sources are phased out. Over the next decade, about 15 gigawatts of coal and gas generation capacity will be retired. Meanwhile, new generation and storage facilities are coming online. During 2025-26 alone, approximately 9.1 GW of new capacity was connected, setting a record for annual additions. The AEMO also lists around 40 GW of committed and anticipated generation and storage projects scheduled for completion by the early 2030s.
According to the latest reliability assessment, no reliability gaps are expected before 2030 under AEMO’s central outlook. This outcome is attributed to increased investment in generation, storage, and transmission infrastructure. Nevertheless, the report emphasizes the importance of timely project delivery, especially as older power stations shut down. Reliability gaps serve as signals for planning purposes, indicating potential future shortfalls in supply, but do not predict blackouts. AEMO continues to monitor demand growth alongside evolving market generation capacity.
Government Initiatives Address Energy and Infrastructure Costs
The federal government has proposed nationwide standards for large data centres concerning electricity supply, grid expenses, and water consumption. These standards would require major facilities to support additional power generation and share connection costs. Additionally, large operators would be mandated to reduce energy use when necessary to maintain grid stability. The proposed regulations also aim to improve water efficiency. Legislation is targeted for early 2027 to incorporate these standards as data centre electricity demands become increasingly significant in 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 include establishing cleaner, more reliable electricity sources and providing greater flexibility in power consumption. The proposals also cover market registration processes, infrastructure costs, and the effects of large new loads on existing consumers. These recommendations accompany AEMO’s updated demand outlook, collectively showing a pipeline of data centre projects that has more than doubled while electricity consumption across Australia’s main power market continues its upward trajectory.