Power hungry: data centre energy use set to skyrocket

The rapid growth of artificial intelligence will strain Australia's electricity network, with data centre energy use expected to surge almost sevenfold over the next ten years, according to a new report from the Australian Energy Market Operator (AEMO). However, the outlook for the National Electricity Market appears positive and is projected to stay stable through the 2030s if renewable energy, storage, and transmission initiatives progress as planned.

AEMO's annual report on future electricity supply and demand reveals that data centres would consume five terawatt hours of energy in 2025/2026, equivalent to three percent of all grid power. This consumption would increase by nearly seven times to 34 terawatt hours by 2035/2036, representing 13 percent of grid power. Despite this projected increase, the report indicates that Australia's energy situation has improved since the previous assessment, with no reliability gaps identified before 2030.

The improved outlook is attributed to record levels of new generation, storage, and a strong pipeline of projects expected over the next decade. A record 9.1 gigawatts of new energy generation and storage came online in 2025/2026, twice the output of the previous year, while another 40 gigawatts of renewable generation and battery storage projects are planned.

Additionally, 33 gigawatts of energy projects received government investment. However, the report warns that these projects must be completed on time to maintain energy reliability, and coal-fired power stations will need to operate until their scheduled retirement dates, with three set for 2028 and 2029. Energy Minister Chris Bowen highlighted that investments in household batteries and large-scale renewable projects are making a difference, emphasizing that while there is still work to be done, the pipeline of initiatives is robust and reliability is improving.