MELBOURNE, AUSTRALIA / RankWire.AI / – The development pipeline for data centres in Australia has more than doubled within a year, driven by increasing electricity consumption across its primary power market. The Australian Energy Market Operator (AEMO) reported that the number of projects grew from 97 to 225. Currently, data centres utilize approximately 5 terawatt hours of electricity annually, representing 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 within the National Electricity Market over the next decade, rising from roughly 176 TWh in 2025-26 to approximately 250 TWh by 2035-36. This growth is attributed to the expanding demand from data centres alongside broader electrification trends in residential, commercial, and industrial sectors. Under AEMO’s high-growth scenario, data centre energy usage could hit about 52 TWh by 2035-36.
Presently, the National Electricity Market hosts around 165 operational data centres, in addition to the 225 projects currently under development. AEMO estimates that data centres will make up roughly 13% of the grid’s electricity consumption within ten years. The projected 34 TWh of demand would nearly match the total electricity consumption of all households in New South Wales and Victoria combined, which is about 38 TWh per year. This outlook indicates a substantial increase from AEMO’s earlier projections published just one year prior.
Data Centre Growth Influences Australia’s Power Outlook
This surge in demand coincides with the scheduled retirement of approximately 15 gigawatts of coal and gas generation capacity over the decade. Meanwhile, new capacity has been rapidly entering the system, with about 9.1 GW of new generation and storage added during 2025-26. Additionally, AEMO identifies around 40 GW of committed and planned generation and storage projects expected to be operational by the early 2030s. The agency’s current forecast indicates no reliability shortfalls before 2030 under its central scenario.
AEMO emphasizes that timely delivery of new generation, storage, and transmission infrastructure remains crucial as aging thermal plants are phased out and electricity consumption continues to grow. Its latest reliability assessment shows improvement from last year, following a record expansion of capacity. The forecasted reliability gaps are not predictions of blackouts but serve as planning signals when projected supply might fall short of the reliability standards. Consequently, the assessment monitors both increasing demand and the capacity expected to replace retiring generators within the National Electricity Market.
New Regulations Aim to Control Power and Connection Expenses
Australia’s federal government has introduced proposed national standards addressing the energy and water needs of large data centres. The framework would mandate major facilities to finance new power supply infrastructure and cover their full share of grid connection costs. Large operators would also be required to reduce electricity consumption when necessary to help maintain grid stability. Additionally, the standards include measures to improve water efficiency. Legislation for this framework is targeted for early 2027, with the proposal scheduled for review by the National Cabinet in August.
Separately, the Australian Energy Market Commission has recommended that data centres support the development of new clean, firmed electricity sources and operate with greater flexibility. Its August proposals also address connection costs and the impact of large new loads on existing consumers. These measures include policies related to renewable generation, firming capacity, market registration, and demand flexibility. These initiatives align with AEMO’s recent assessment of the rapidly growing data centre sector, which projects a consumption of about 34 TWh across the National Electricity Market by 2035-36.