MELBOURNE, AUSTRALIA / RankWire.AI / – Over the past year, the development pipeline for Australia’s data centres has more than doubled amid rising electricity consumption across its primary power market. According to the Australian Energy Market Operator, the number of projects increased from 97 to 225. Currently, data centres use approximately 5 terawatt hours of electricity annually, accounting for about 3% of the power supplied through the National Electricity Market. AEMO projects their energy use to reach around 34 TWh by 2035-36.
AEMO predicts that total electricity consumption within the National Electricity Market will grow by more than 40% over the next decade. This increase will see usage rise from about 176 TWh in 2025-26 to nearly 250 TWh in 2035-36. The market primarily serves eastern and southern Australia but excludes Western Australia and the Northern Territory. The surge in data centre demand is part of this growth, along with broader electrification in homes, businesses, and industries. AEMO’s high-growth scenario for data centres indicates an estimated consumption of about 52 TWh by 2035-36.
Currently, the National Electricity Market hosts approximately 165 operational data centres, in addition to the 225 projects now under development. AEMO anticipates that within a decade, data centres could account for roughly 13% of the market’s electricity use. The projected 34 TWh would nearly match the combined annual electricity consumption of all households in New South Wales and Victoria, which total about 38 TWh. This outlook marks a significant increase from AEMO’s earlier estimates published just one year prior.
Data Centre Expansion Alters Australia’s Electricity Forecasts
This growth in demand occurs alongside the scheduled retirement of about 15 gigawatts of coal and gas generation over the same period. Meanwhile, the rate of new capacity entering the system remains high, with approximately 9.1 GW of new generation and storage connected during 2025-26. Additionally, AEMO has identified roughly 40 GW of committed and anticipated generation and storage projects set for delivery by the early 2030s. Under its central forecast, the operator currently sees no reliability gaps before 2030.
AEMO emphasized the importance of timely deployment of new generation, storage, and transmission infrastructure, as older thermal plants retire and electricity demand continues to grow. The latest reliability assessment shows improvement from the previous year, thanks in part to the record pace of capacity additions. These reliability gaps are not predictions of blackouts but are planning indicators highlighting potential shortfalls in supply relative to demand. The assessment considers both the increasing demand and the capacity expected to replace retiring generation across the market.
New Policies Aim to Reduce Power and Connection Expenses
Australia’s federal government has introduced proposed national standards to regulate the energy and water needs of large data centres. The framework would mandate that major facilities finance new power supply infrastructure and shoulder their full share of grid connection costs. Large operators would also be required to curtail electricity use when necessary to support grid stability. Additionally, the standards include measures aimed at enhancing water efficiency. Legislation is targeted for early 2027, with the framework scheduled for review by National Cabinet in August.
The Australian Energy Market Commission has independently recommended that data centres facilitate new clean, firmed electricity sources and adopt more flexible operating practices. Its August proposals also address connection costs and the impact of substantial new loads on existing consumers. The commission proposed reforms concerning renewable generation, firming capacity, market registration, and flexible demand. These initiatives complement AEMO’s latest assessment of an expanding data centre sector. By 2035-36, AEMO expects data centres to consume about 34 TWh of electricity across the National Electricity Market.