Australia’s AEMO forecasts a seven-fold increase in data center electricity consumption over the coming decade.

The Australian Energy Market Operator (AEMO) forecasts that data centre electricity consumption will grow seven-fold over the next decade, rising from current levels of 5 terawatt hours (TWh) to around 34 TWh. In its latest electricity statement of expectations, the public utility organisation highlighted that rapid expansion in the sector, driven by increased artificial intelligence (AI) adoption and cloud services, represents one of the most significant sources of forecast growth and uncertainty.

“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.”

The 2026 projection is based on the potential development of 225 known data centre projects. However, AEMO cautioned that proposed facilities frequently fail to reach construction status. “More than 40 percent of data centre projects since 2025 [have] either dropped out or regressed in connection status,” it noted. Operators also commonly indicate that new facilities may take five-to-10 years to reach full capacity. Consistent with international experience, AEMO added that mature data centres in aggregate are projected to utilise around 50 percent of their network connection capacity, operating constantly with only minor increases in consumption during working hours relative to non-working hours.

For historical context, last year’s forecast estimated data centre electricity consumption would reach 21.4 TWh by 2034-35 and 35.7 TWh by 2054-55. Recognising the volatility in project timelines, AEMO also modelled the potential impact on the electricity grid if data centre demand growth materialised up to four years earlier than projected. The results indicated that grid reliability could still be maintained.

Separately, new federal standards for energy and water consumption by data centres could be agreed as early as Wednesday, according to ABC reporting, though it remains unclear whether individual states will commit to the framework.