Data centre growth and the energy transition
Understanding the clean energy opportunities and challenges of Australia’s data centre pipeline.
The predicted growth of artificial intelligence, cloud computing and digital infrastructure demand is leading to a data centre boom, which may mean that data centres could represent up to 11 per cent of the nation’s total electricity consumption by 2035 and reshape Australia’s energy future.
Getting the balance right
December 2025
Getting the balance right: data centre growth and the energy transition explores the role of data centres in the clean energy transition and how Australia can position itself as a leader in clean energy infrastructure. The report was compiled for the CEFC by global management consultant Baringa.
Read our Investment Insight Read the full report
Data centres are critical infrastructure powering the modern digital economy. With the right policy settings and renewable generation, Australia can position itself as a leader in clean digital infrastructure - creating jobs, improving grid resilience, and driving innovation across the energy system.Julia HinwoodHead of Infrastructure, CEFC
about the Sector
Australia stands at a pivotal moment in managing the unprecedented growth in data centre demand.
Driven by artificial intelligence (AI), cloud computing and digital infrastructure demand, Australian data centres are expected to grow fourfold within a decade and could represent up to 11 per cent of the nation’s total electricity consumption by 2035, up from about one per cent in 2025.
If no additional offsetting renewable generation is built, data centres could significantly impact electricity markets.
The role of the CEFC
As Australia’s specialist investor in Australia’s net zero future, the CEFC sees an increasing urgency in considering the energy implications of AI, recognising that the energy required to power the data centres behind AI is substantial. As investment in data centres increases, the approach to sustainability will move front and centre.
The CEFC commissioned Baringa to develop a comprehensive view of the energy implications of Australia’s data centre pipeline to help guide decision-making for policymakers, investors and industry.
Report findings
Data centres are expected to deliver significant benefits across the economy, with AI and automation alone potentially generating up to $600 billion towards Australia’s GDP by 2030. Data centre capacity is projected to rise from 1.35 GW today to between 4.7 GW and 7.4 GW by 2035.
The report modelled various scenarios and found that an additional 3.2 GW of renewable energy capacity and 1.9 GW of battery storage by 2035 would contain price rises and neutralise additional emissions.
Getting the balance right: data centre growth and the energy transition finds that coordinated action between government, investors and industry is needed to realise the sector’s potential.
The report calls for:
- Policymakers to guide development into optimal locations, incentivise clean energy and storage investment and improve transparency.
- Data centre operators to maintain social license to operate, committing to clean energy procurement and storage and adopting innovative technologies for energy efficiency.
- Investors to embed ESG requirements in investment decisions, reward best practice and align with Australian Sustainable Finance Taxonomy and EU Green Taxonomy.
