Summary
- AEMO forecasts data-centre electricity demand in the National Electricity Market reaching about 34TWh by 2035-36.
- The Australian government is preparing a broader national framework covering infrastructure, sustainability, and community impacts.
- Europe's existing reporting regime provides a useful comparator as governments move from project-by-project scrutiny towards sector-wide rules.
Australia is moving towards a more coordinated national framework for data-centre development as electricity-system modelling points to a sharp increase in sector demand over the coming decade.
The Australian Energy Market Operator expects data-centre electricity consumption in the National Electricity Market to rise from about 5TWh in 2025-26 to approximately 34TWh in 2035-36 under its current outlook. That would move the sector from around 3% to roughly 13% of electricity supplied through the grid.
The forecast would take data centres from a relatively small but rapidly growing load today towards a much larger share of future electricity demand. AEMO’s modelling does not simply add every announced project at nameplate capacity: it attempts to account for project attrition, actual use of connection capacity, and the gradual ramp-up of new facilities.
The Australian government is preparing a wider policy response, with national measures expected to address questions including infrastructure costs, sustainability, local impacts, and how rapidly expanding compute demand should be integrated into the energy system.
That reflects a familiar progression. Data-centre policy often begins at the project level, with individual planning applications assessed against noise, water, traffic, power, and local environmental constraints. Once the aggregate load becomes large enough, the issue moves upstream into transmission investment, generation planning, tariffs, national industrial strategy, and resource allocation.
Australia is reaching that stage because the scale of proposed AI infrastructure has changed faster than many of the rules originally designed for conventional commercial and industrial developments. Individual campuses can now seek hundreds of megawatts, while developers increasingly combine their projects with dedicated substations, batteries, gas generation, or renewable supply arrangements.
The question of who pays for electrical infrastructure is likely to be particularly important. New transmission lines, substations, and connection assets can create costs extending beyond the boundary of a data-centre site. Regulators must decide which costs are attributable directly to the new customer and which belong in wider network investment.
DataCentral has covered similar decisions in the US, including dedicated transmission-cost arrangements for large Virginia data-centre loads. European markets face the same underlying question as connection queues expand: a project may be commercially attractive, but the network expenditure required to serve it cannot simply disappear into the system.
Europe also offers a regulatory comparator on sustainability. The EU Energy Efficiency Directive already requires qualifying data centres above defined thresholds to report information about their energy and water performance, while the European Commission is developing further rating and performance measures.
Australia’s eventual framework will not necessarily copy the European model. Its grid structure, geography, generation mix, planning system, and concentration of new projects are different. But both regions are moving away from treating data-centre environmental performance as a matter of voluntary corporate disclosure alone.
The AEMO forecast also carries uncertainty. Data-centre projects can be cancelled, delayed, downsized, or connected without using their full contracted capacity immediately. AI hardware efficiency, utilisation, customer demand, and the availability of generation and transmission will all affect the final electricity trajectory.
Even with those caveats, an increase from around 5TWh to about 34TWh would make the sector a material component of Australian electricity planning. The policy task is therefore moving beyond whether individual data centres should be approved towards the conditions under which a large new class of electricity demand should be connected, powered, cooled, and charged for the infrastructure it requires.
