MELBOURNE, AUSTRALIA / RankWire.AI / – Amidst a broader growth in electricity consumption across Australia, the country’s data centre development pipeline has more than doubled within a year, reflecting rising demand for power in its primary electricity market. The Australian Energy Market Operator reported an increase from 97 projects to 225. Currently, data centres utilize approximately 5 terawatt hours of electricity annually, accounting for about 3% of the power supplied through the National Electricity Market. AEMO forecasts this figure could reach around 34 TWh by 2035-36.
Looking ahead, AEMO predicts a more than 40% increase in total electricity consumption across the National Electricity Market over the next decade. From an estimated 176 TWh in 2025-26, demand is expected to climb to approximately 250 TWh by 2035-36. The market, which serves eastern and southern Australia but excludes Western Australia and the Northern Territory, is experiencing this growth not only due to expanding data centre operations but also because of broader electrification initiatives in residential, commercial, and industrial sectors. Under a high-growth scenario, AEMO anticipates data centres could account for about 52 TWh by 2035-36.
Currently, the National Electricity Market hosts roughly 165 operational data centres, in addition to the 225 projects presently under development. Within ten years, AEMO expects data centres to make up around 13% of the grid’s electricity usage. The projected 34 TWh would nearly match the total electricity consumption of all households in New South Wales and Victoria combined, which is about 38 TWh annually. This outlook also signifies a substantial upward revision from AEMO’s data centre demand estimates published a year earlier.
Data Centre Expansion Alters Power Consumption Projections
This surge in demand is set against a backdrop of scheduled shutdowns, which will eliminate around 15 gigawatts of coal and gas generation capacity over the coming decade. Meanwhile, new power generation and storage facilities have entered the grid at record levels, with approximately 9.1 GW brought online during 2025-26. Additionally, roughly 40 GW of committed and planned generation and storage projects are expected to be operational by the early 2030s. AEMO’s current outlook indicates no reliability gaps before 2030 under its central forecast.
AEMO emphasizes the importance of timely deployment of new generation, storage, and transmission infrastructure, particularly as older thermal plants retire and electricity use intensifies. Its latest reliability assessment shows improvement from the previous year, thanks to the record capacity additions. It’s important to note that forecasted reliability gaps are not predictions of blackouts but serve as planning indicators, highlighting when projected supply might fall short of the required standard. The assessment considers both increasing demand and the capacity expected to replace retiring power plants across the National Electricity Market.
New Regulations Address Power and Connection Expenses
Australia’s federal government has introduced proposed national standards aimed at managing the energy and water demands of large data centres. The proposed framework mandates that major facilities fund new power supply developments and share the costs associated with grid connection fully. Furthermore, large data centre operators will be required to reduce electricity consumption when necessary to support grid stability. The standards also target improvements in water efficiency. Legislation is targeted for early 2027, with the framework scheduled for review by National Cabinet in August.
In parallel, the Australian Energy Market Commission has recommended that data centres bolster support for new clean, reliable electricity sources and adopt more flexible operation models. Its August proposals also focus on connection costs and the impact of large new loads on existing electricity consumers. The recommended measures encompass renewable generation, firming capacity, market registration, and demand flexibility. These initiatives complement AEMO’s latest assessment of a rapidly expanding data centre sector, which projects that by 2035-36, data centres will draw roughly 34 TWh of electricity across the National Electricity Market.