MELBOURNE, AUSTRALIA / RankWire.AI / – The dominant electricity grid in Australia is expected to see a dramatic increase in energy use driven by the rapid growth of data centres. According to the Australian Energy Market Operator, there are now 225 data centre projects in the connection pipeline, a significant jump from 97 projects recorded just a year earlier. Currently, approximately 165 data centres operate throughout the National Electricity Market. Their combined electricity consumption is close to 5 terawatt hours annually, making up roughly 3% of the total market usage.
By 2035-36, AEMO projects data centre energy consumption will reach about 34 TWh, increasing the sector’s share of the National Electricity Market’s total to approximately 13%. Under a high-growth scenario, demand could climb to nearly 52 TWh within the same period. The National Electricity Market encompasses eastern and southern Australia but excludes Western Australia and the Northern Territory. The latest data highlights how swiftly large-scale computing facilities have become a major contributor to new grid demand.
During the next decade, total electricity demand across the market is expected to increase significantly. AEMO’s forecasts indicate annual consumption rising from around 176 TWh in 2025-26 to about 250 TWh in 2035-36, representing an increase of more than 40%. This growth is driven not only by expanding data centres but also by broader electrification efforts across households, industries, and businesses. The projected 34 TWh of data centre energy use alone nearly matches the current electricity consumption of households in New South Wales and Victoria combined.
As aging power plants retire, data centres add to grid pressure
Australia’s electricity infrastructure must accommodate this growing demand while existing generation facilities are phased out. Over the next decade, approximately 15 gigawatts of coal and gas capacity will be decommissioned. Meanwhile, new power generation and storage projects are coming online. During 2025-26 alone, roughly 9.1 GW of new capacity was connected, setting a record for annual additions. Additionally, AEMO lists about 40 GW of committed and planned generation and storage projects scheduled for delivery by the early 2030s.
A recent reliability assessment indicates no forecasted gaps before 2030 under AEMO’s central outlook, which is attributed to increased investments in generation, storage, and transmission. The report emphasizes the importance of completing projects on time as older power stations retire. Reliability gaps serve as signals for planning when the anticipated supply may fall below required standards, but they do not predict blackouts. AEMO continues to monitor demand growth and the evolving mix of energy sources within the market.
Government initiatives target energy costs and grid stability
The federal government has introduced proposed national standards for large data centres, addressing issues such as electricity supply, grid charges, and water consumption. These standards would oblige major facilities to support new power infrastructure, share connection costs, and reduce consumption during periods of grid stress. Measures aimed at enhancing water efficiency are also part of the proposed framework. Legislation is targeted for early 2027, as the increasing electricity demand from data centres becomes a key element of Australia’s national energy strategy.
The Australian Energy Market Commission has also put forward new guidelines for large data centres connecting to the grid. Their recommendations focus on providing cleaner, more reliable electricity and increasing flexibility in power use. The proposals also cover market registration, infrastructure expenses, and the impact of large new loads on existing consumers. These recommendations complement AEMO’s updated demand outlook, illustrating that while the number of data centres has more than doubled, electricity use in Australia’s main market continues to rise.