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A slew of new data centre proposals threatens to tip Victoria’s power demand past total current supply and could send electricity bills rocketing as developers try to cash in on the artificial intelligence infrastructure boom.

In its latest planning report, the Australian Energy Market Operator (AEMO) has revealed connection enquiries for large industrial loads – mostly data centres in Melbourne’s north and west – have swelled to more than 18 gigawatts.

A leading energy expert has warned the data centre boom could lead to higher electricity bills.Credit: Marija Ercegovac

In a blunt assessment, the operator warned that if these projects proceeded, peak demand would “more than double” – an explosion it stated was “not possible” to support.

To manage even a fraction of this load, the report outlines the need for significant new infrastructure, including potential new terminal stations at Truganina, Donnybrook and Somerton. However, the AEMO noted there was “no certainty” regarding which projects would go ahead.

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Energy experts are now urging the Allan government to intervene and charge developers for the extra burden placed on networks. They also warn that demand is, in part, being fuelled by developers inflating power needs to secure permits they intend to sell.

Victorian network operator AusNet revealed it is assessing a pipeline of more than 10 gigawatts of data centre connection requests – a figure that the Victoria’s auditor-general has said could exceed demand above the state’s current supply capacity.

However, the energy giant warned the market operator that this unprecedented level of interest was being driven partly by applicants lacking “demonstrable experience” in the sector.

Leading energy market expert Professor Bruce Mountain has warned that Victoria’s data centre boom has the hallmarks of a gold rush, fuelled by speculative developers overstating their power needs, seeking to secure grid approvals to create options they hope to on-sell.

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He said the “enormous” and “breathtaking” connection figures received by AusNet and AEMO defied reality.

“Hopeful developers have an incentive to overstate their prospects to create options to later sell,” Mountain said. “There will be a huge gap between the total electrical demand of those proposals and what actually gets developed.”