The Department of Climate Change, Energy, the Environment and Water is examining the impact of a rapid surge in AI-driven data centres on Australia's renewable-focused electricity grid, highlighting both challenges and potential opportunities, according to a briefing document released under freedom of information laws.
Data centres currently account for around 2% of electricity consumption in the national electricity market, but the Australian Energy Market Operator projects this could rise to 6% by 2029-30 and 12% by 2049-50.
There are approximately 260 data centres in operation, with deployable capacity expected to double by 2030.
The briefing notes that some data centres may offer demand flexibility, particularly during peak periods, although the level of flexibility varies by facility type.
It also emphasises the potential for data centres to support renewable energy integration through behind-the-meter batteries or power purchase agreements, which could improve energy efficiency and help manage rising demand.
In March 2025, the Energy and Climate Change Ministerial Council committed to working with energy market bodies to examine the broader implications of the data centre boom.
The department aims to provide ministers with final advice by the end of 2025, after stakeholder consultation and an assessment of regulatory frameworks.
AEMO is also reviewing rules around data centre connections and backup generation.