MELBOURNE, AUSTRALIA / RankWire.AI / – In Australia, the development pipeline for data centres has more than doubled over the past year, amid increasing electricity consumption across its primary power market. According to the Australian Energy Market Operator, the number of projects grew from 97 to 225. Presently, data centres use around 5 terawatt hours of electricity annually, accounting for approximately 3% of the power delivered through the National Electricity Market. AEMO projects this figure could reach about 34 TWh by 2035-36.
Forecasts from AEMO indicate that total electricity consumption within the National Electricity Market will increase by more than 40% over the next decade. The projection shows growth from roughly 176 TWh in 2025-26 to approximately 250 TWh in 2035-36. The market covers eastern and southern regions of Australia but excludes Western Australia and the Northern Territory. The rising demand from data centres is part of a broader trend of electrification across residential, commercial, and industrial sectors. Under a high-growth scenario, AEMO estimates data centre energy use could reach about 52 TWh by 2035-36.
Currently, the National Electricity Market hosts about 165 operational data centres, alongside the 225 projects currently under development. Within a decade, data centres are expected to represent around 13% of the market’s total electricity consumption. The projected 34 TWh consumption would nearly match the total electricity used annually by all households in New South Wales and Victoria combined, which is about 38 TWh. These figures represent a significant increase from AEMO’s earlier estimates published just one year ago, highlighting the sector’s rapid growth.
Data centre expansion reshapes Australia’s electricity outlook
This surge in demand coincides with scheduled closures that will eliminate approximately 15 gigawatts of coal and gas generation over the next decade. Meanwhile, a record pace of new capacity additions has been observed, with about 9.1 GW of new generation and storage coming online during 2025-26. AEMO also identifies around 40 GW of committed and expected generation and storage projects slated for delivery by the early 2030s. The operator’s current outlook indicates no reliability gaps before 2030 under its central scenario.
AEMO emphasizes the importance of timely deployment of new generation, storage, and transmission infrastructure, especially as older thermal plants retire and electricity demand continues to grow. The latest reliability assessment shows improvement from the previous year, following a record increase in new capacity. It’s important to note that forecasted reliability gaps do not imply imminent blackouts but serve as planning indicators when projected supply may fall below reliability standards. The assessment considers both rising demand and the capacity expected to replace retiring generation across the National Electricity Market.
New policies aim to reduce power and connection costs
Australia’s federal government has proposed establishing national standards concerning the energy and water needs of large data centres. This framework would require major facilities to finance new power supply projects and cover their full share of grid connection expenses. Large operators would also need to cut electricity use when necessary to maintain grid stability. Additionally, the standards aim to enhance water efficiency. Legislation to implement these measures is targeted for early 2027, with the framework scheduled for review by National Cabinet in August.
The Australian Energy Market Commission has separately suggested that data centres support the development of new clean, firmed electricity sources and operate with greater flexibility. Its recommendations from August also address connection costs and the impact of large new loads on existing consumers. The commission has proposed measures related to renewable generation, firming capacity, market registration, and flexible demand. These reforms complement AEMO’s latest assessment of a rapidly growing data centre sector. By 2035-36, AEMO anticipates data centres will consume about 34 TWh of electricity across the National Electricity Market.