AEMO predicts seven-fold rise in data centre power use over next decade

The Australian Energy Market Operator (AEMO) is predicting a seven-fold increase in electricity consumption by data centres over the next decade.

In its latest electricity statement of expectations [pdf], the public utility organisation projected growth “from current levels of 5 terawatt hours (TWh) to around 34 TWh”.

In last year’s forecast, its forecast for data centre electricity consumption was “21.4 TWh by 2034-35 and 35.7 TWh by 2054-55.”

“Rapid growth in data centres, driven by increased artificial intelligence (AI) adoption and cloud services, remains one of the most significant sources of forecast growth and uncertainty as a strong pipeline of projects is evident in grid connection enquiries,” AEMO said.

“Data centres are expected to become an increasingly significant driver of electricity demand over the medium and long term, particularly in NSW and Victoria where the concentration of development is projected to be greatest.”

AEMO said its 2026 forecast is based on “the potential development of 225 known data centre projects”.

However, it noted there is significant uncertainty, with proposed data centre projects often not reaching build status.

“More than 40 percent of data centre projects since 2025 [have] either dropped out or regressed in connection status,” it noted.

“Data centre operators [also] often indicate that new facilities may take five-to-10 years to reach capacity. 

“Consistent with international experience , mature data centres in aggregate are projected to utilise around 50 percent of their network connection capacity, and operate constantly with only minor increases in consumption during working hours, relative to non-working hours.”

This year, AEMO also modelled the potential impact on the electricity grid if data centre growth in demand was realised up to four years sooner; the results, it said, showed grid reliability could be maintained.

It noted the importance of doing the modelling, given the growth in data centre proposals generally.

New standards for energy and water consumption by data centres could be agreed at a federal level as early as Wednesday, the ABC has reported, although it’s unclear if states will sign up.