A leading market analyst believes Australian data-centre capacity could grow by almost 300 per cent by 2035, climbing from 1.2 gigawatts (GW) today to approximately 4.7GW.
This would require 6GW of new generation capacity to support annual data-centre electricity consumption of more than 21 terawatt-hours (TWh) a decade from now – equating to just under 10 per cent of the National Electricity Market (NEM).
“We project that around $15 billion of investment in real terms is needed to bring this additional power online,” Moody’s Ratings said in a report.
This commitment forms part of an $85 billion investment required to support the Australian energy market’s broader transition, which Moody’s Ratings said poses “material execution and funding risks for power companies”.
“To maintain credit strength, power companies will need to exercise discipline and continue to invest through robust contractual frameworks,” the analyst said.
Moody’s sees most of the power feeding Australia’s data-centre fleet to be derived from the country’s renewable energy zones (REZs), with long-duration firming capacity such as gas generation and batteries to play an important role in ensuring power reliability.
NSW is in the box seat to support data-centre demand through its five emerging REZs, but significant investment is required to deliver these new energy regions.
“To illustrate the scale of the pipeline, the first stage of the Central West Orana REZ is likely to cost around $5.5 billion,” Moody’s said. “Transgrid is developing the non-contestable (regulated) enabling works for CW Orana, which will entail further spending of about $625 million in real terms.”
Moody’s said the establishment of the REZs also hinges on the completion of the NEM’s transmission projects, including EnergyConnect, HumeLink and VNI West.
“Delayed rollouts of REZs and other key transmission projects could hinder power access for prospective data centres,” the analyst said.
Moody’s said Australia’s data-centre rollout also faces social risks, with households increasingly recognising the power and water these facilities consume. This is set against a macro backdrop of rising electricity bills and stagnating household incomes, along with climate impacts related to lower rainfall.
“Social risk is partially offset by data centres’ provision of increasingly essential digital infrastructure, job creation and infrastructure upgrades,” Moody’s said.
With current capacity of over 1300MW, Australia is considered the third largest data-centre market in the Asia-Pacific.
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