Australia’s energy systems are actively preparing for the rapid growth of data centres, which are among the fastest growing sources of electricity demand in the National Electricity Market (NEM) and Wholesale Electricity Market (WEM), with coordinated work underway across industry and at AEMO to support their secure, efficient integration into the grid and future energy system planning.
As Australia’s independent energy system and market operator, and system planner in the NEM, AEMO is supporting this growth through three key areas: supporting efficient connections, improving demand forecasting, and strengthening rules and standards to protect system security.
Supporting efficient connections
AEMO Group Manager Onboarding and Connections, Margarida Pimentel, says growing data centre demand is becoming an increasingly important consideration in coordinating a renewables-led energy system, with greater focus being placed on forecasting emerging sources of electricity demand.
“AEMO recognises the critical role data centres play in Australia’s economy and supports their continued development as part of the energy transition," Ms Pimentel says.
“This includes working with network service providers (NSPs), which lead the connection process, to assess each facility’s performance standards and ensure data centres operate predictably and remain stable during disturbances.
“Due to their scale, concentration and continuous operation, data centres require careful management of system strength, voltage stability and transmission investment, particularly if not well coordinated,” she said.
Location also plays an important role in achieving efficient outcomes.
Coordinated planning to align new transmission investment with areas of growing demand, alongside data centre developers considering locations in regions with abundant renewable energy resources, can help support lower-cost outcomes for consumers while maintaining system reliability and security.
In the NEM, AEMO tracks applicable projects through key stages of the connection process, from application through to implementation and commissioning, with reporting including project applications received by AEMO.
In Western Australia, AEMO has been working closely with the network operator Western Power, industry and the government to understand and facilitate data centre uptake, while ensuring the power system remains reliable and secure.
For the first time, AEMO’s most recent Quarterly Energy Dynamics report included insights into data centre connections across the NEM. At the end of the March 2026 quarter, 11 large scale projects (>5 megawatts (MW)), representing 5.4 gigawatts (GW) of maximum demand, were progressing through the transmission connection process.
Around 60% of capacity is in New South Wales and 40% in Victoria, with most projects in early stages.
AEMO is working with distribution network service providers (DNSPs) to improve future visibility of distribution connections.
“Current experience indicates that large data centre connections are targeting an approximate two-year timeframe from application to energisation, though timelines vary depending on project readiness and system conditions,” Ms Pimentel says.
Recognising that large data centres typically ramp-up over 5-10 years, AEMO incorporates this into its forward outlooks. The outlook for all prospective data centre development, is reported in the NEM and WEM Electricity Statements of Opportunities (ESOOs).
Improving demand forecasting
Australia is currently home to 162 operational data centres nationally, predominantly in Sydney and Melbourne, accounting for around 2% of today’s grid-supplied electricity use.
In Western Australia there are currently 15 sites in operation across the South West Interconnected System (SWIS).
AEMO’s 2025 Inputs, Assumptions and Scenarios report projected consumption to increase by around 25% annually to reach approximately 12 terawatt hours (TWh), or around 6% of grid-supplied electricity, by 2030, before continuing to climb to around 34 TWh, or 12%, by 2050.
While AEMO has aways incorporated data centres into forecasting as large industrial loads, the 2025 NEM ESOO recognised that data centres differ fundamentally from traditional large energy users. Their growth is faster and more concentrated, and often less predictable, and as a result, they are now treated as a distinct category in long-term planning.
To manage uncertainty, AEMO distinguishes between commercial and industrial scale facilities, filters speculative demand, and tests outcomes across multiple scenarios. This supports robust planning while enabling more efficient delivery of generation and network infrastructure.
Strengthening technical frameworks
To support the integration of large inverter based loads such as data centres, AEMO has initiated a rule change process through the Australian Energy Market Commission (AEMC) and is working with industry and market bodies to improve clarity, consistency and predictability in connection requirements.
In March 2026, the AEMC published a draft determination on new access standards for inverter-based loads, following AEMO’s rule change request, proposing a clearer and more consistent framework for how large loads connect and perform.
In parallel, AEMO is developing interim guidelines to support proponents ahead of the final rule implementation, alongside progressing broader workstreams including enhanced demand forecasting, system strength assessments and improved modelling approaches.
“These reforms are about enabling growth in large inverter-based loads in a way that is predictable, technically robust, and consistent across the system,” Ms Pimental says.
“This is not about slowing investment. It’s about enabling it in a way that supports both the power system and the broader economy.”
Learning from international experience
International experience highlights the importance of proactive planning and strong technical standards.
In July 2024, approximately 1,500 MW of data centre load in Virginia in the United States disconnected following a single network fault, contributing to system instability. Similar events elsewhere have prompted a renewed focus on how large, inverter-based loads connect and behave during disturbances.
As a founding member of the International System Operators Network (ISON), AEMO works closely with system operators across the United States and Europe to better understand the behaviour of large loads, improve operational visibility, and develop best-practice approaches to integration.
“We are seeing strong global alignment on the need for clearer technical standards for large inverter-based loads, reflecting lessons learned internationally,” Ms Pimentel says.
“These lessons are informing Australia’s approach, ensuring local frameworks reflect global best practice while supporting system security.
Demand and supply working together
The rise in data centre demand is occurring alongside a substantial pipeline of new generation and storage projects.
Around 72 GW of generation and storage is currently installed in the NEM and 67 GW of new capacity is currently connecting, plus more than 345 GW of projects have been publicly announced.
This reflects a key dynamic in the energy transition: large new loads can help drive investment in new supply. Data centres are increasingly entering into power purchase agreements, underwriting new generation and storage while securing reliable energy for their operations.
“If we’re talking about the biggest numbers in the room, then it’s equally important to recognise the scale of investment already signalled on the supply side,” Ms Pimentel says.
AEMO’s analysis indicates that data centres are likely to operate as relatively inflexible loads, prioritising uptime and reliability.
Their effective integration will require strong operational visibility, clearly defined performance standards, and predictable behaviour during system disturbances.
AEMO continues to engage closely with NSPs, developers and technology providers, while drawing on both domestic and international experience to inform its approach.
The integration of data centres represents a significant shift in Australia’s energy landscape, reinforcing the need for coordinated planning across generation, networks and large energy users.
AEMO’s role spans supporting efficient connection processes, developing robust demand forecasts, and enabling frameworks that maintain system security, while actively supporting the growth of data centres as a driver of economic value and national productivity.
“The opportunity is substantial, but so too is the responsibility to ensure the energy system can support it,” Ms Pimentel says.
ENDS