MELBOURNE, AUSTRALIA / RankWire.AI / – The development pipeline for Australia’s data centres has more than doubled in size within a year, driven by rising electricity needs across the nation’s primary power market. According to the Australian Energy Market Operator, the number of projects increased from 97 to 225. Currently, data centres use around 5 terawatt hours of electricity annually. This accounts for approximately 3% of the power supplied through the National Electricity Market. AEMO projects this consumption will reach roughly 34 TWh by 2035-36.
AEMO predicts that total electricity use in the National Electricity Market will grow by over 40% in the next decade. Consumption is expected to rise from about 176 TWh in 2025-26 to nearly 250 TWh in 2035-36. The market covers eastern and southern Australia but excludes Western Australia and the Northern Territory. The increase in data centre demand is part of a broader trend fueled by electrification in homes, businesses, and industries. Under a high-growth scenario, AEMO forecasts data centre energy use could reach about 52 TWh by 2035-36.
Currently, the National Electricity Market hosts approximately 165 operational data centres. Alongside the 225 projects now in development, AEMO expects data centres to make up around 13% of grid electricity consumption within a decade. The projected 34 TWh would be nearly equal to the electricity used by all households in New South Wales and Victoria combined, which totals about 38 TWh annually. This forecast marks a significant increase from AEMO’s earlier data centre energy demand estimates published a year ago.
Data Centre Growth Influences Future Electricity Outlook
The rising demand occurs as scheduled shutdowns will remove roughly 15 gigawatts of coal and gas generation over the next ten years. Meanwhile, new capacity has been added rapidly. During 2025-26, about 9.1 GW of new generation and storage capacity connected to the grid. AEMO also identifies approximately 40 GW of committed and planned generation and storage projects to be completed by the early 2030s. The operator currently sees no reliability issues before 2030 in its central forecast.
AEMO emphasizes that timely deployment of new generation, storage, and transmission infrastructure is crucial as older thermal plants retire and energy consumption increases. Its latest reliability assessment shows improvement from the previous year, thanks to record capacity additions. These reliability gaps are not predictions of blackouts but signals for planning when supply might fall short of standards. The assessment considers both rising demand and the capacity expected to replace retiring plants across the National Electricity Market.
New Regulations Address Power and Connection Expenses
Australia’s federal government has introduced national standards to regulate the energy and water needs of large data centres. These rules would require major facilities to finance new power supplies and cover their share of grid connection costs. Large operators would also need to reduce electricity use when necessary to help maintain grid stability. The standards include measures to improve water efficiency. The government plans to enact legislation by early 2027, with the framework scheduled for review by the National Cabinet in August.
The Australian Energy Market Commission has separately recommended that data centres support cleaner, more reliable electricity sources and operate with greater flexibility. Its August proposals also address connection costs and the impact of large new loads on existing consumers. The commission suggested reforms related to renewable generation, firming capacity, market registration, and flexible demand. These reforms complement AEMO’s recent assessment of the rapidly expanding data centre sector. By 2035-36, AEMO expects data centres to consume about 34 TWh of electricity across the National Electricity Market.