MELBOURNE, AUSTRALIA / RankWire.AI / – The Australian Energy Market Operator forecasts a significant increase in electricity demand driven by expanding data centre infrastructure in Australia’s main electricity market. Currently, the country hosts 165 operational data centres, which consume nearly 5 terawatt hours annually, representing about 3% of total market usage. This growth coincides with the pipeline of 225 data centre projects now awaiting connection, compared to only 97 projects a year earlier.
AEMO projects that data centre electricity consumption could reach approximately 34 TWh by 2035-36, raising their contribution to the National Electricity Market to around 13%. Under a high-growth scenario, demand from data centres could approach 52 TWh within that timeframe. The National Electricity Market, which includes eastern and southern Australia, excludes Western Australia and the Northern Territory. These figures underscore how rapidly large computing facilities are becoming a key factor in new grid demand.
In addition to data centres, overall electricity consumption across the market is expected to grow considerably over the next decade. AEMO estimates annual use will rise from about 176 TWh in 2025-26 to roughly 250 TWh in 2035-36, marking 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 forecasted 34 TWh of data centre energy demand is nearly equivalent to the total electricity consumed by households across New South Wales and Victoria combined.
Data centre expansion intensifies pressure amid retirements of old power stations
Australia’s electricity system must accommodate this growth while many existing power plants are scheduled for closure. Over the next decade, approximately 15 gigawatts of coal and gas-fired generation will retire. Meanwhile, new generation and storage solutions are entering the system. During 2025-26, around 9.1 GW of new capacity was connected, setting a record for annual additions. Additionally, AEMO lists roughly 40 GW of committed and expected generation and storage projects planned for delivery by the early 2030s.
The most recent reliability assessment indicates no forecasted reliability gaps before 2030 under AEMO’s central scenario. This outcome is attributed to increased investments in generation, storage, and transmission infrastructure. Nonetheless, the agency emphasizes the importance of timely project delivery as older power stations close. Reliability gaps are not predictions of blackouts but serve as planning signals indicating when supply might fall below necessary levels. AEMO continues to monitor demand growth along with the evolving generation mix within the market.
Government initiatives aim to address energy and grid expenses
The federal government has introduced proposed national standards for large data centres, covering aspects such as electricity supply, grid connection costs, and water efficiency. These standards would mandate major facilities to support new power generation, share connection costs, and reduce consumption when needed to bolster grid stability. Measures to improve water efficiency are also included. Legislation based on this framework is targeted for early 2027, as data centre electricity demand continues to become a more prominent aspect of the national energy strategy.
Furthermore, the Australian Energy Market Commission has recommended new requirements for large data centres connecting to the grid. Their proposals call for the integration of cleaner, more reliable electricity supply and increased 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 complement AEMO’s updated demand outlook. Taken together, the official assessments reveal a pipeline of data centres that has more than doubled in size, alongside ongoing growth in electricity consumption across Australia’s main power market.