MELBOURNE, AUSTRALIA / RankWire.AI / – The primary electricity market in Australia is expected to see a significant increase in energy consumption as the development of data centres accelerates. The Australian Energy Market Operator reports that there are now 225 data centre projects in the connection pipeline. This is a jump from 97 projects listed just one year earlier. Currently, approximately 165 data centres are operational across the National Electricity Market. Their combined electricity consumption is close to 5 terawatt hours annually, accounting for about 3% of total market use.
AEMO forecasts that electricity demand from data centres could reach roughly 34 TWh by 2035-36. This would represent about 13% of the total consumption in the National Electricity Market. The agency’s high-growth scenario projects data centre energy use could rise to nearly 52 TWh during the same period. The National Electricity Market covers the eastern and southern regions of Australia, excluding Western Australia and the Northern Territory. These figures illustrate how rapidly large-scale computing facilities have become a crucial component of the new grid demand.
Overall electricity use in the market is also expected to grow substantially over the next decade. AEMO’s forecast shows annual consumption increasing from approximately 176 TWh in 2025-26 to around 250 TWh by 2035-36. This growth exceeds 40%. Data centres are a significant part of this rise, alongside increased electrification across households, industries, and businesses. The projected demand of 34 TWh from data centres is nearing the total electricity consumption of households across New South Wales and Victoria combined.
Data Centre Growth Adds Strain Amid Retirement of Older Power Plants
Australia’s electricity system must accommodate this rapid growth while existing power plants are scheduled to retire. Over the next decade, approximately 15 gigawatts of coal and gas generation capacity will be phased out. Meanwhile, new generation and storage projects are entering the system. During 2025-26, about 9.1 GW of new capacity was connected, setting a record for annual additions. Additionally, AEMO lists roughly 40 GW of committed and anticipated generation and storage projects scheduled for delivery by the early 2030s.
The latest reliability assessment indicates no expected reliability shortfalls before 2030 under AEMO’s central forecast. The organization attributes this to increased investments in generation, storage, and transmission infrastructure. It also emphasizes the importance of completing projects on time as older power stations are decommissioned. While reliability gaps highlight potential periods of supply shortfall, they are planning indicators rather than predictions of blackouts. AEMO continues to monitor demand growth alongside the evolving mix of power generation sources in the market.
Government Initiatives Focus on Managing Energy and Grid Expenses
The federal government has proposed a set of national standards targeting large data centres. These standards would address aspects such as electricity supply, grid costs, and water consumption. Large facilities would be required to support new power connections and contribute to their share of connection expenses. Furthermore, they would need to reduce energy use when necessary to help maintain grid stability. The proposed standards also aim to improve water efficiency. Legislation supporting these measures is targeted for early 2027, as data centre electricity demand becomes increasingly central to national energy planning.
The Australian Energy Market Commission has recommended additional requirements for large data centres that connect to the grid. Its proposals include the integration of new clean, reliable electricity sources and greater flexibility in power consumption. The commission also addressed issues such as market registration, infrastructure costs, and the impact of large new loads on existing consumers. These recommendations complement AEMO’s updated demand outlook. Both assessments reveal that the pipeline of data centres has more than doubled, while electricity consumption across Australia’s main power market continues to increase.