Data centres to use nearly as much power as every NSW and Victorian home by 2036

The rapid expansion of data centers in Australia is set to dramatically increase electricity demand, potentially consuming as much power as all households in New South Wales and Victoria combined by 2036. The Australian Energy Market Operator (AEMO) has identified 225 data center projects in various development stages, signaling a surge in energy needs far exceeding previous forecasts.

Currently, operational data centers use about 3% of the national electricity grid's supply. However, AEMO's latest projections indicate this figure could jump to 13% within a decade, amounting to 34 terawatt-hours of electricity annually. This is a stark contrast to AEMO's previous estimates, which did not anticipate such demand levels until after 2050.

The surge in data center development, more than doubling in the past year, is primarily concentrated in New South Wales and Victoria, with South Australia also seeing significant growth. While this expansion promises substantial investment, estimated at $150 billion, it also poses a risk to grid stability and could drive up power prices.

In response, the Australian government is preparing to implement new regulations. Prime Minister Anthony Albanese will announce measures requiring data centers to guarantee new renewable energy supply to offset their consumption. This initiative aims to ensure that the growth of artificial intelligence and related technologies does not lead to increased energy bills or compromise energy security.

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Australia is in a strong position to attract investment in data centres, but maintaining social licence will be essential. That means ensuring energy bills do not rise, water security is maintained and locations are appropriate.