MELBOURNE, AUSTRALIA / RankWire.AI / – The main electricity market in Australia is expected to see a significant rise in power consumption driven by the rapid expansion of data centre projects. According to the Australian Energy Market Operator, there are now 225 data centre initiatives in the pipeline for connection, a notable increase from the 97 projects recorded just a year earlier. Currently, approximately 165 data centres are operational across the National Electricity Market, with their electricity consumption nearing 5 terawatt hours annually, which accounts for roughly 3% of the overall market demand.
AEMO forecasts that by 2035-36, electricity use by data centres could reach around 34 TWh, elevating their share of the National Electricity Market’s total consumption to about 13%. The agency’s high-growth scenario suggests demand could climb even higher, approaching 52 TWh in the same period. The National Electricity Market, which covers eastern and southern Australia, excludes Western Australia and the Northern Territory. These latest figures highlight how rapidly large-scale computing facilities have become a crucial factor in shaping new grid demand patterns.
Over the next decade, total electricity consumption in the market is also projected to increase significantly. AEMO expects annual usage to grow from approximately 176 TWh in 2025-26 to nearly 250 TWh by 2035-36, representing an increase of over 40%. This growth is driven not only by data centres but also by increased electrification efforts across households, industries, and businesses. Notably, the projected 34 TWh demand from data centres rivals the combined electricity consumption of households across New South Wales and Victoria.
Data centres intensify pressure amid aging generation assets
Australia’s electricity network must accommodate this surge in demand while existing power sources are phased out, with approximately 15 gigawatts of coal and gas-fired generation scheduled for retirement over the next ten years. Concurrently, new generation and storage projects are entering the system, with roughly 9.1 GW of capacity connected during 2025-26, setting a record for annual additions. The Australian Energy Market Operator also lists about 40 GW of committed and planned generation and storage projects slated for delivery by the early 2030s.
The latest reliability assessments indicate no projected reliability shortages before 2030 under AEMO’s central scenario, a result attributed to increased investments in generation, storage, and transmission infrastructure. The agency emphasizes that meeting scheduled project deadlines is crucial as older power stations are decommissioned. Reliability gaps, which serve as planning signals indicating potential future shortfalls, do not suggest imminent blackouts. AEMO continues to monitor demand growth alongside evolving generation sources within the market.
Government initiatives aim to address energy costs and grid stability
The federal government has introduced proposed national standards for large data centres that encompass electricity supply, grid connection costs, and water consumption. These standards would obligate major facilities to support new power generation, share connection expenses, and reduce consumption during periods of grid stress. Additionally, the standards include measures to enhance water efficiency. Legislation implementing these standards is targeted for early 2027, aligning with the increasing role of data centre energy demand in national energy strategies.
Furthermore, the Australian Energy Market Commission has recommended new requirements for large data centres connecting to the grid, advocating for cleaner, more reliable electricity supply and increased flexibility in power use. Their proposals address issues such as market registration, infrastructure costs, and the impact of significant new loads on existing consumers. These recommendations complement AEMO’s updated demand outlook, illustrating a pipeline of data centre projects that has more than doubled alongside rising electricity consumption across Australia’s primary power market.