Australia faces surging energy demand from data centres and electrification

Australia’s National Electricity Market (NEM) is facing significant structural shifts driven by rapid electrification and surging energy demand from data centres. According to the Australian Energy Market Operator (AEMO) 2026 Electricity Statement of Opportunities (ESOO) report, electricity consumption from data centres in the NEM is projected to rise from approximately 5 terawatt-hours (TWh) in 2025–26 to 34 TWh by 2035–36. This represents an increase from 3 per cent to 13 per cent of total grid demand.

This growth is fueled by both new facilities and existing centres reaching full capacity. AEMO noted that while 225 known data-centre projects are currently navigating the grid connection process—representing 67 gigawatts (GW) of proposed capacity—over 40 per cent of these projects have either dropped out or regressed in connection status since 2025.

Beyond data centres, the electrification of households, industrial processes, and transport via electric vehicles is identified as a dominant structural driver of long-term demand growth. These rapid changes are challenging traditional grid planning models, which often rely on legacy systems and slower-moving infrastructure assumptions that may not accurately reflect the current pace of the energy transition.