MELBOURNE, AUSTRALIA / RankWire.AI / – The main electricity grid in Australia is expected to see a significant surge in demand driven by the rapid growth of data centre infrastructure. According to the Australian Energy Market Operator, 225 data centre projects are currently in the connection pipeline, a notable increase from 97 projects recorded just a year earlier. At present, approximately 165 data centres are operational across the National Electricity Market. Their combined electricity consumption is close to 5 terawatt hours annually, representing about 3% of total market usage.
AEMO projects that electricity demand from data centres could rise to around 34 TWh by 2035-36, boosting their share of total National Electricity Market consumption to approximately 13%. In a high-growth scenario, demand might reach nearly 52 TWh within the same period. The National Electricity Market encompasses eastern and southern Australia, excluding Western Australia and the Northern Territory. These figures highlight how quickly large-scale computing facilities have become a substantial contributor to new grid loads.
Over the coming decade, overall electricity consumption in the market is also expected to grow significantly. AEMO forecasts that annual usage will increase from roughly 176 TWh in 2025-26 to about 250 TWh by 2035-36, marking a growth of over 40%. This rise is driven partly by data centres but also by increased electrification across households, industries, and businesses. The projected demand of 34 TWh from data centres is approaching the total electricity currently used by households in New South Wales and Victoria combined.
Growing Data Centre Demand Adds Strain Amidst Aging Power Infrastructure
Australia’s electricity system must accommodate this increasing load while existing power plants retire. Over the next ten years, around 15 gigawatts of coal and gas generation capacity will be phased out. At the same time, new generation and storage facilities are entering the grid, with approximately 9.1 GW of new capacity connected during 2025-26, setting an annual record for additions. Furthermore, AEMO has identified approximately 40 GW of committed and planned generation and storage projects expected to come online by the early 2030s.
The latest reliability assessment indicates no forecasted reliability shortages before 2030 under AEMO’s central projection. The results are attributed to increased investments in generation, storage, and transmission infrastructure. Emphasis is also placed on the importance of ensuring that projects are completed on schedule, especially as older power stations are decommissioned. While potential reliability gaps serve as planning signals for possible supply shortfalls, they do not predict blackouts. AEMO continues to monitor demand growth alongside evolving generation configurations across the market.
Government Initiatives 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 use efficiency. These standards would mandate large facilities to support new power generation and contribute to connection expenses. Additionally, operators of significant data centres will be expected to curtail consumption when necessary to maintain grid stability. The proposed regulations also aim to enhance water efficiency measures. Legislation to implement these standards is targeted for early 2027, as data centre electricity demands become an increasingly vital component of the national energy strategy.
The Australian Energy Market Commission has further recommended new requirements for large data centres connecting to the grid. These proposals include the integration of cleaner, more reliable electricity sources and increased flexibility in power consumption. The recommendations also address issues related to market registration, infrastructure costs, and the impact of substantial new loads on existing consumers. These suggestions are aligned with AEMO’s updated demand outlook. Collectively, these official assessments demonstrate that while the number of data centres has more than doubled, electricity consumption across Australia’s key power market continues to grow.