MELBOURNE, AUSTRALIA / RankWire.AI / – Australia’s data centre development pipeline has more than doubled in a year as electricity demand rises across its main power market. The Australian Energy Market Operator said the pipeline increased from 97 projects to 225. Data centres currently consume about 5 terawatt hours of electricity each year. That represents roughly 3% of power supplied through the National Electricity Market. AEMO expects their consumption to reach about 34 TWh by 2035-36.
AEMO forecasts total electricity consumption across the National Electricity Market will rise more than 40% over the coming decade. Consumption will increase from about 176 TWh in 2025-26 to roughly 250 TWh in 2035-36. The market serves eastern and southern Australia but excludes Western Australia and the Northern Territory. Growing data centre demand forms part of that increase alongside wider electrification across homes, businesses and industry. AEMO’s high-growth data centre scenario reaches about 52 TWh by 2035-36.
The National Electricity Market already has about 165 operating data centres, alongside the 225 projects now in development. AEMO expects data centres to account for roughly 13% of grid electricity consumption within a decade. The projected 34 TWh would approach the electricity now used by all households in New South Wales and Victoria combined. Those households consume about 38 TWh annually. AEMO’s latest outlook also marks a substantial increase from its data centre demand expectations published one year earlier.
Data centre demand reshapes electricity outlook
The demand increase will occur while scheduled closures remove about 15 gigawatts of coal and gas generation over the decade. New capacity has also entered the system at a record pace. About 9.1 GW of new generation and storage reached the grid during 2025-26. AEMO also identifies roughly 40 GW of committed and anticipated generation and storage projects for delivery by the early 2030s. The operator currently identifies no forecast reliability gaps before 2030 under its central outlook.
AEMO said timely delivery of new generation, storage and transmission remains important as older thermal plants close and electricity use grows. The latest reliability assessment improved from the previous year after the record addition of new capacity. Forecast reliability gaps do not represent predictions of blackouts. They serve as planning signals when projected supply may fall short of the reliability standard. The assessment therefore tracks both rising demand and the capacity expected to replace retiring generation across the National Electricity Market.
New rules target power and connection costs
Australia’s federal government has proposed national standards covering the energy and water demands of large data centres. The framework would require major facilities to underwrite new power supply and pay their full share of grid connection costs. Large operators would also have to reduce electricity consumption when needed to support grid stability. The standards include requirements aimed at improving water efficiency. The government has targeted legislation for early 2027, with the framework scheduled for consideration by National Cabinet in August.
The Australian Energy Market Commission has separately recommended that data centres support new clean, firmed electricity supply and operate more flexibly. Its August recommendations also address connection costs and the impact of large new loads on existing electricity consumers. The commission proposed measures covering renewable generation, firming capacity, market registration and flexible demand. Those reforms sit alongside AEMO’s latest assessment of a rapidly expanding data centre sector. By 2035-36, AEMO expects data centres to consume about 34 TWh of electricity across the National Electricity Market.