Australia's Data Centres Could Eat 13% of National Electricity by 2035

Key points

• Australia's data centres currently consume roughly 3% of electricity flowing through the national grid, according to the Australian Energy Market Operator.
• That share is forecast to reach 13% by 2035, a more than four-fold increase driven largely by AI infrastructure demand.
• The shift is creating political friction between the federal government and conservative state and territory leaders over where new facilities get built.
• Australia's prime minister is now under pressure to shape national AI policy while managing those competing interests.

A single data point, buried at the end of a routine regulator's report, is quietly reframing Australia's energy debate.

The Australian Energy Market Operator, the body that manages electricity supply across most of the country, published its annual snapshot of electricity supply and demand this week. Most of it was standard reading for energy analysts. One figure wasn't.

Data centres, the large warehouse-like buildings filled with computer servers that store data and run AI software, currently account for about 3% of all electricity delivered through Australia's national grid. By 2035, the regulator forecasts that share climbing to around 13%. That's not a rounding error. It's a structural shift in how a wealthy country uses power.

What is driving the jump?

AI is the short answer. Training and running large AI models requires enormous computing power, and computing power requires electricity. Global technology companies are racing to build or expand data centres in countries with stable power supplies and favourable policy environments. Australia ticks both boxes.

Data centres are no longer a minor footnote in national energy planning. A jump from 3% to 13% of grid consumption over a decade puts them in the same conversation as heavy industry. We covered the politics building around this infrastructure two weeks ago, and the Australian dimension sharpened fast: our story on 28 August found that energy minister Chris Bowen had already ruled out fossil-fuel exemptions for state data centres.

Who decides where these facilities go?

That's where the politics get complicated. As first reported by The Guardian, Australia's prime minister is facing pressure from leaders of conservative-leaning states and territories, each competing for data centre investment and the tax revenue it carries.

States control land use and planning approvals. The federal government sets broader policy and negotiates with international technology companies. When those two levels disagree, projects slow or stall entirely.

The result is a tug of war playing out behind closed doors, with billions of dollars of infrastructure and a significant slice of the country's future electricity load in the balance.

What does this mean for ordinary Australians?

More data centres mean more demand on a grid already managing a complicated shift away from coal toward wind and solar. Higher demand, if supply doesn't keep up, pushes electricity prices up for households and businesses alike.

Planning decisions made in state capitals over the next few years will shape where that load lands and who bears it. The regulator's forecast is a signal that AI infrastructure is no longer an abstract policy question. It's an energy bill question.

Common questions

Why do AI data centres use so much electricity?

Running AI software requires specialised chips that process vast amounts of information simultaneously, and those chips generate significant heat, requiring energy-hungry cooling systems on top of the computing power itself.

Could this push up household electricity prices?

Possibly, if demand grows faster than new generation capacity is built. Regulators and governments will need to ensure supply keeps pace with the forecast increase in data centre load.