MELBOURNE, AUSTRALIA / RankWire.AI / – The development pipeline for data centres across Australia has more than doubled within a year, driven by increasing electricity consumption in the nation’s primary power market. According to the National Electricity Market operator, 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 energy supplied through the National Electricity Market. The Australian Energy Market Operator (AEMO) anticipates their consumption will escalate to around 34 TWh by 2035-36.
Forecasts from AEMO suggest that total electricity demand within the National Electricity Market will grow by over 40% over the next decade. This increase, from roughly 176 TWh in 2025-26 to an estimated 250 TWh in 2035-36, encompasses growth in electricity use from data centres, as well as wider electrification efforts across residences, commercial entities, and industrial sectors. The high-growth scenario outlined by AEMO projects data centre consumption could reach about 52 TWh by 2035-36.
At present, the National Electricity Market hosts around 165 operational data centres, alongside the 225 projects currently in the pipeline. AEMO projects that, within ten years, data centres will account for approximately 13% of the grid’s electricity consumption. The projected 34 TWh demand is comparable to the total electricity used by all households in New South Wales and Victoria combined, which is about 38 TWh annually. This outlook also indicates a significant upward revision from AEMO’s data centre demand estimates issued one year prior.
Data Centre Expansion Alters Australian Electricity Forecasts
This surge in electricity demand coincides with the scheduled shutdown of approximately 15 gigawatts of coal and gas-fired generation over the next decade. Meanwhile, the system has experienced a record pace of new capacity additions — around 9.1 GW of new generation and storage capacity came online during 2025-26. Additionally, AEMO identifies roughly 40 GW of committed and expected projects for generation and storage scheduled for delivery by the early 2030s. Under its central outlook, the operator currently foresees no reliability gaps before 2030.
AEMO emphasized the importance of timely deployment of new generation, storage, and transmission infrastructure, especially as older thermal power plants retire and electricity demand continues to grow. Its latest reliability assessment shows improvement from previous years, following a record addition of new capacity. The forecasted reliability gaps are not predictions of blackouts but serve as planning indicators signaling when supply might fall short of the necessary reliability standards. Consequently, the assessment considers both increasing demand and the capacity expected to replace retiring generation across the National Electricity Market.
New Regulations Focus on Power Costs and Connection Charges
Australia’s federal government has introduced proposed national standards aimed at managing the energy and water requirements of large data centres. The proposed framework mandates major facilities to finance the construction of new power sources and contribute fully to grid connection costs. Furthermore, large operators would be required to reduce electricity consumption when necessary to maintain grid stability. The standards also incorporate measures to improve water efficiency. Legislation based on these standards is targeted for early 2027, with the framework 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 suggestions also address issues related to connection costs and the impact of large new loads on existing consumers. Proposed measures include support for renewable generation, firming capacity, market registration, and demand flexibility. These initiatives complement AEMO’s latest assessment, which highlights the rapid expansion of the data centre sector. By 2035-36, the operator expects data centres to draw about 34 TWh of electricity across the National Electricity Market.