AEMC determination strengthens framework to address anticipated data centre impacts on the national electricity grid
The nation’s energy rule maker, the Australian Energy Market Commission, published the final rule today, Improving the NEM Access Standards – Package 2.
Future energy demands are projected to grow as data centre numbers do and this demand is forecast to grow sevenfold, from 5 to 34 terawatt hours by 2035. The data centre share of electricity demand is expected to rise from around 3% to around 13% equivalent to the amount of energy needed to power almost half of Australia’s 11,500,000 homes.
AEMC Chair Anna Collyer said Australia’s electricity system is changing rapidly and the Commission’s broader reforms will also ensure data centre connection rules keep pace with the industry’s projected power demands and the grid remains secure for consumers.
“The existing access standards were developed for a very different power system dominated by traditional generation and relatively passive electricity loads,” said Ms Collyer.
“Our guiding principle is that once a customer is big enough to materially affect the grid, it must be treated as part of that grid. Our reforms will also ensure new data centre connections can proceed efficiently and securely, without unexpected costs or risks being pushed onto other electricity consumers.”
Data centres often use sophisticated power electronics that can respond very quickly to changes in the electricity system; however, during network disturbances, this technology has caused major supply disruptions internationally, including 1,500 MW of simultaneous disconnections in Virginia in July 2024.
To address this risk, the final rule introduces a number of proactive reforms, including:
- A clear 30 MW threshold for large inverter-based loads, including large data centres, so that connections with the potential to materially affect the power system are subject to appropriate technical requirements.
- New technical standards requiring large inverter-based loads to ride through certain power system disturbances, rather than disconnecting unnecessarily when the system is under stress.
- A requirement for network businesses to consider the combined impact of nearby large inverter-based loads, recognising that several connections can interact with each other and have a greater collective impact than an individual connection.
- A requirement for AEMO to develop clear modelling guidance for large loads, with requirements designed to be proportionate to the potential impact of a connection and practical for industry to implement.
What happens next
The final rule for Improving the NEM access standards – Package 2 is effective immediately. However, applicants who are advanced in the connection process and have negotiated their access standards will be given a 6-month grace period to finalise their connection.
This allows connection applicants who are close to finalising negotiations with their Network Service Provider to use the old access standards, to minimise disruption to their applications. For more information about the new rule, visit the AEMC’s project page.
AEMC’s broader reforms to protect consumers
The AEMC has also released a consultation paper today on the Operational Integration and visibility of large inverter-based loads rule change (OIV). The paper considers the need for enhanced operational and long-term visibility of large IBLs in the electricity system. More information is here. This paper and the final determination announced today are part of a broader data centre program which also includes rule changes to address:
- Cost recovery for network augmentations
- Data centre contracting obligations; and
- Streamlining the connections process.
These reforms seek to progress our recommendation to Australian Energy Ministers made earlier this year on how data centres in Australia should bring their own clean, firmed energy, operate flexibly and connect efficiently.