Australia warns data centres could become a major power load by 2036
Australia's energy market operator has forecast that data centres could become one of the country's biggest new sources of electricity demand within a decade. The Australian Energy Market Operator said the facilities could draw almost as much power from the grid by 2036 as all homes in New South Wales and Victoria do today. The warning comes as the number of known data-centre projects under development has more than doubled over the past year.
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The operator said there are now 225 known projects at various stages of development that want to connect to the national electricity market, compared with 97 a year earlier. It said 165 data centres are already operating across the market, which covers all states and territories except Western Australia and the Northern Territory. Those existing sites are already using about 3% of electricity supplied to the grid, but the operator now expects that share to rise to 13% in ten years, even after allowing for a high cancellation rate among projects in the pipeline.
The forecast translates to about 34 terawatt-hours of electricity by 2036. That is close to the 38 terawatt-hours consumed by every home in New South Wales and Victoria today, according to the operator's estimate. The revision is a sharp increase from a year ago, when the operator said data centres would not reach that level of demand until after 2050, and even its faster-growth scenario had put the figure at about 24 terawatt-hours by mid-2035.
The scale of the forecast matters because it points to a significant new pressure on Australia's electricity system at a time when governments are trying to manage reliability, investment and the pace of the energy transition. Data centres are essential to cloud computing, artificial intelligence and digital services, but they are also highly power-intensive and often require continuous supply. A rapid increase in demand could affect planning for generation, transmission and network upgrades, as well as the timing of new rules for large energy users.
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The issue is also politically sensitive because the federal government is preparing a policy response. Prime Minister Anthony Albanese is due to outline more of his proposed energy rules for data centres at a Business Council dinner on Tuesday, with the rules expected to be settled at national cabinet on Wednesday. That suggests the forecast is feeding directly into near-term decisions about how Australia will regulate and accommodate the sector's growth.
The latest figures also show how quickly the sector has expanded in the past 12 months. The operator said the number of known projects in development has more than doubled, reflecting a rush of proposals seeking access to the national grid. While not every project will proceed, the operator said the pipeline is now large enough to materially change its outlook for future demand.
The national electricity market is the main power grid for most of Australia's population and industry, so changes in demand from a single fast-growing sector can have wider consequences. The operator's forecast suggests data centres could move from being a relatively small part of the system to a major planning factor within one decade. That would place them alongside households and heavy industry as a central consideration for energy policy.
What remains unclear is how many of the proposed projects will ultimately be built, how quickly they will connect, and what rules the government will adopt to manage their impact on the grid. The operator said the outlook is still uncertain, particularly after 2030, but its revised forecast indicates the sector is growing faster than previously expected. The next key developments are the prime minister's remarks and the national cabinet decision expected on Wednesday.
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