MELBOURNE, AUSTRALIA / RankWire.AI / – The development pipeline for Australia’s data centres has more than doubled within a year, driven by increasing electricity demand across its primary power market. The Australian Energy Market Operator reported that the pipeline grew from 97 projects to 225. Currently, data centres utilize around 5 terawatt hours of electricity annually, accounting for approximately 3% of the power supplied through the National Electricity Market. AEMO projects their consumption will escalate to roughly 34 TWh by 2035-36.
Forecasts from AEMO indicate that total electricity use across the National Electricity Market will increase by more than 40% over the next decade. The consumption is expected to rise from approximately 176 TWh in 2025-26 to about 250 TWh in 2035-36. While the market primarily serves eastern and southern Australia, it excludes Western Australia and the Northern Territory. The expanding demand from data centres contributes to this growth, alongside broader electrification in households, industry, and commercial sectors. Under AEMO’s high-growth scenario, data centre electricity use could reach about 52 TWh by 2035-36.
Currently, the National Electricity Market hosts roughly 165 operational data centres, in addition to the 225 projects under development. AEMO anticipates that within ten years, data centres will account for approximately 13% of the grid’s electricity consumption. The projected 34 TWh would nearly equal the total electricity used by all households in New South Wales and Victoria combined, which is around 38 TWh annually. This outlook marks a significant increase compared to AEMO’s data centre demand estimates published a year earlier.
Data centre expansion influences future electricity forecasts
The growth in demand coincides with scheduled closures of about 15 gigawatts of coal and gas generation over the decade. Meanwhile, new capacity has been added at a record pace, with approximately 9.1 GW of new generation and storage reaching the grid during 2025-26. Additionally, roughly 40 GW of committed and anticipated projects are planned for delivery by the early 2030s, according to AEMO. The operator currently sees no forecasted reliability shortfalls before 2030 under its central outlook.
AEMO emphasized the importance of timely deployment of new generation, storage, and transmission infrastructure as older thermal plants retire and electricity demand rises. Its latest reliability assessment showed improvement from the previous year after a record influx of new capacity. These reliability gaps are not predictions of blackouts but serve as planning indicators when supply may fall below the required standard. The assessment considers both increasing demand and the capacity expected to replace retiring generation across the National Electricity Market.
New regulations aim to reduce power and connection costs
Australia’s federal government has proposed national standards addressing the energy and water requirements of large data centres. These standards would obligate major facilities to finance new power supply and cover their full share of grid connection costs. Large operators would also need to reduce electricity consumption when necessary to maintain grid stability. The framework includes measures to enhance water efficiency. Legislation is targeted for early 2027, and the framework is scheduled for consideration by National Cabinet in August.
The Australian Energy Market Commission has separately recommended that data centres support the development of new clean, firmed electricity supply and operate with greater flexibility. Its August proposals also cover connection costs and the impact of increasing loads on existing consumers. These recommendations include measures related to renewable generation, firming capacity, market registration, and demand flexibility. These reforms complement AEMO’s latest assessment of a rapidly expanding data centre sector. By 2035-36, AEMO expects data centres to consume around 34 TWh of electricity across the National Electricity Market.