MELBOURNE, AUSTRALIA / RankWire.AI / – Over the past year, Australia’s data centre development pipeline has more than doubled as electricity demand continues to grow across its primary power market. The Australian Energy Market Operator reported an increase from 97 projects to 225, with data centres now consuming approximately 5 terawatt hours of electricity annually—about 3% of the power supplied through the National Electricity Market. AEMO projects this figure to reach around 34 TWh by 2035-36.
AEMO predicts that total electricity use across the National Electricity Market will increase by more than 40% over the next decade, rising from roughly 176 TWh in 2025-26 to about 250 TWh by 2035-36. The market covers eastern and southern Australia but excludes Western Australia and the Northern Territory. Rising demand from data centres, along with widespread electrification in residential, commercial, and industrial sectors, contributes to this growth. Under a high-growth scenario, AEMO estimates data centres could account for approximately 52 TWh by 2035-36.
Currently, about 165 data centres are operational within the National Electricity Market, alongside the 225 projects presently under development. AEMO anticipates data centres will make up around 13% of the grid’s electricity consumption within ten years. The projected 34 TWh consumption would be nearly equal to the combined annual electricity used by all households in New South Wales and Victoria, which consume about 38 TWh each year. This outlook also represents a significant rise from AEMO’s data centre demand forecasts published a year earlier.
Data centre growth shifts electricity outlook
While demand surges, scheduled shutdowns are expected to remove about 15 gigawatts of coal and gas generation over the same period. Simultaneously, a record pace of new capacity has been added, with around 9.1 GW of new generation and storage coming online during 2025-26. Additionally, roughly 40 GW of committed and planned generation and storage projects are targeted for completion by the early 2030s. According to AEMO, there are currently no reliability gaps forecast before 2030 under its central scenario.
AEMO emphasized that timely deployment of new generation, storage, and transmission infrastructure remains crucial as older thermal plants shut down and electricity demand increases. Its latest reliability assessment shows improvement from the previous year, reflecting the record addition of new capacity. It is important to note that forecast reliability gaps do not necessarily predict blackouts but serve as planning indicators when future supply may fall short of required standards. The assessment considers both rising demand and the capacity expected to replace retiring plants across the market.
New policies aim to curb power and connection costs
Australia’s federal government has introduced proposed national standards addressing the energy and water use of large data centres. These regulations would require major facilities to finance new power supply and contribute their fair share of grid connection expenses. Large operators would also be mandated to reduce electricity consumption when necessary to maintain grid stability. The standards also include provisions to enhance water efficiency. Legislation is targeted for early 2027, and the framework is scheduled for review by the National Cabinet in August.
Separately, the Australian Energy Market Commission has recommended that data centres support new, clean, and reliable electricity sources while operating with greater flexibility. Its August suggestions also focus on connection costs and the effect of large new loads on existing consumers. The commission proposed measures related to renewable generation, firming capacity, market registration, and flexible demand. These reforms complement AEMO’s latest assessment of a sector experiencing rapid expansion. By 2035-36, AEMO projects data centres will consume around 34 TWh of electricity across the National Electricity Market.