Victoria Data Centre Growth Raises Need for Gas-Fired Power

Electricity demand from existing data centres in Victoria rose from 96 megawatts in the first quarter of 2025 to 187 megawatts in the first quarter of 2026, according to the Australian Energy Market Operator.

Domestic gas production in Victoria is projected to fall by more than 50 per cent by 2030. Two coal-fired stations—Yallourn, scheduled to close in 2028, and Loy Yang A, slated for 2035—will further reduce baseload supply. APA Group, owner of Victoria’s gas transmission system, stated in a February announcement that it expects continued demand for gas as coal plants retire and data-centre loads grow.

The state government has set offshore wind targets of at least two gigawatts by 2032 and four gigawatts by 2035. A spokesman for Energy Minister Lily D’Ambrosio said the state remains on track for a 95 per cent renewable electricity target by 2035, with gas and firming technology covering the remaining 5 per cent.

Reed of the Australian Industry Group noted that some United States data-centre projects have shifted to on-site gas generation while awaiting grid connections. Reed added that a similar pattern in Victoria could increase annual gas demand by a sizeable share of the current east-coast total of about 500 petajoules.

Modelling by Baringa for the Clean Energy Finance Corporation projected that data-centre growth could raise Victorian wholesale electricity prices by 23 per cent by 2035 without additional renewable generation and storage. The Australian Energy Market Operator reported 1.5 gigawatts of data-centre capacity at the application stage and another 0.7 gigawatts approved or under construction.

Data Centres Australia stated operational capacity stands at 1.4 gigawatts and is projected to reach 3.2 gigawatts by 2030.