Australia must avoid the mistakes seen in overseas markets where data centre growth outpaced energy system planning, according to Commissioner Rainer Korte, as the Australian Energy Market Commission (AEMC) moves to introduce new standards for large loads.
Speaking at the Data Power series in Melbourne, Korte said rapid expansion of data centres and AI infrastructure is now one of the fastest-growing drivers of electricity demand – bringing both economic opportunity and system risk.
“If large loads aren’t planned and integrated well, the consequences land squarely on the power system and its security, and ultimately on consumer bills,” he said.
Korte pointed to international examples where data centre growth has already tested grid limits. In Ireland, rapid and concentrated development placed significant strain on the electricity system, leading to a moratorium on new data centre connections in 2021 while planning, regulatory, and operational frameworks caught up.
“Roughly three years later, they lifted the moratorium and introduced significant regulatory reforms,” Korte said. He also highlighted events in Northern Virginia – known as Data Centre Alley and one of the world’s largest concentrations of data centres – where the behaviour of large-scale facilities during disturbances exposed new risks.
“We saw how thousands of megawatts of data centres disconnecting in milliseconds can turn a routine disturbance into a major system event,” he said. These examples, he suggested, demonstrate what can happen when infrastructure deployment runs ahead of system understanding and regulatory frameworks.
Not a typical load
A central theme of Korte’s speech was that modern data centres do not behave like traditional industrial loads – and this is now being felt by power systems. Unlike conventional facilities, many data centres connect via inverter-based systems, including UPS infrastructure. This changes how they respond to grid events.
“That means their response to disturbances can more closely resemble that of a generator than that of a traditional industrial load,” Korte said. In practice, this means data centres can rapidly disconnect to protect sensitive equipment during disturbances. “If multiple large loads disconnect at once, this can amplify frequency and voltage disturbances, trigger cascading events and risk system security,” he said.
The challenge is magnified by scale and concentration, with clusters of large facilities increasingly connecting in the same regions.
New standards for large loads
In response, the AEMC is progressing new connection standards designed to reflect the technical characteristics of modern data centres and other inverter-based loads. The Commission released a draft determination in March proposing updates to access standards, including clearer definitions and classification of large inverter-based loads within the National Electricity Rules. Submissions on the draft rule close on 7 May.
“The existing access standards are not well-suited to the technical characteristics or scale of large inverter-based loads, like data centres,” Korte said. A key element is a three-tiered classification framework, intended to ensure that requirements are proportionate to the size and system impact of the load.
The reforms also aim to address a growing visibility issue for system operators, particularly for large loads connecting at the distribution level.
“AEMO has limited visibility of non-registered large inverter-based loads…making it harder to plan and operate the system securely as their numbers grow,” Korte said.
Managing disturbance response
At the core of the proposed changes are new technical requirements governing how large loads respond to disturbances. These include expectations around “ride-through” capability – the ability of a facility to remain connected during voltage or frequency events – or to disconnect in a controlled manner.
“The intent is to reduce the risk that large loads exacerbate system events, particularly as their scale and concentration increase,” Korte said. The goal is to prevent cascading disconnections, which can lead to broader outages and system instability.
Balancing growth and security
Korte emphasised that the objective is not to restrict data centre development, but to ensure it is integrated in a way that supports both system security and affordability.
The AEMC’s broader reform agenda includes: ensuring new loads fund their own network connections; encouraging flexible demand and firming capability; improving connection processes and certainty; and increasing operational visibility of large loads.
When done effectively, he argued, data centres can contribute positively to the energy system. “They don’t just avoid harm; they actively support the system by underwriting new generation, shaping demand more efficiently and reducing pressure on shared network costs,” Korte said.
A critical moment for planning
Korte framed the current period as a pivotal moment where Australia has the opportunity to integrate rapid digital infrastructure growth without compromising the power system. “The path forward is clear, but it requires coordination – across jurisdictions, across institutions, and across industry,” he said.
The alternative, he suggested, is repeating the experience of markets where data centre expansion outpaced planning and regulation. Ultimately, the challenge is not choosing between digital growth and energy security – but designing a system where both can be delivered together. “If we align policy, regulation and networks effectively, data centres won’t just be integrated into the grid, they will help power its future.”