AEMC drawing up new electricity connection rules to manage AI boom

The Australian Energy Market Commission (AEMC) has announced it has completed a comprehensive overhaul of the technical requirements for connecting to the national electricity grid, which includes addressing emerging challenges to the grid from new large energy users such as data centres and hydrogen electrolysers.

The Commission today published its final determination on 'Package 1' of improvements to the National Electricity Market (NEM) access standards, which focuses on making it faster and cheaper for renewable energy generators to connect to the grid. At the same time, the AEMC is seeking stakeholder feedback on 'Package 2', which proposes new requirements for large energy users to ensure power system security.

Both packages stem from the Australian Energy Market Operator's (AEMO) comprehensive review of technical requirements for connection in 2022, which involved extensive stakeholder consultation.

AEMC Chair Anna Collyer said these reforms would help accelerate Australia's energy transition while maintaining system security.

"This is the most significant modernisation of the NEM technical connections standards since 2018, coming at a critical time when the pace of connections needs to accelerate dramatically to meet Australia's renewable energy targets," she said. "With renewable energy projected to triple by 2030 and utility-scale batteries to increase fivefold in the same period, these reforms will help reduce connection bottlenecks while maintaining system security."

The finalised Package 1 reforms will make the grid connection process more efficient by:

• adding more prescription and clarity to technical requirements, reducing costly negotiations
• better accommodating inverter-based resources like solar, wind and batteries
• broadening application to synchronous condensers and high voltage direct current (HVDC) links needed for system stability.
   

The finalised Package 1 reforms will commence on 21 August 2025, with transitional provisions to minimise disruptions to ongoing connection applications.

The Commission is now also seeking stakeholder feedback on Package 2, which seeks to address the projected growth of large-scale electricity users, particularly data centres driven by AI development.

"The rise of artificial intelligence is driving unprecedented demand for data centres in Australia, with some facilities potentially requiring as much electricity as small cities," Collyer said. "Package 2 proposes new standards to ensure these facilities can respond appropriately during power system disturbances and don't inadvertently make problems worse during system events."

The potential need for such reforms was highlighted by a recent incident in the United States where 60 data centres consuming 1,500 MW of power disconnected simultaneously during a system disturbance, compounding grid stability issues.

The Commission invites stakeholder feedback on Package 2 by 19 June 2025.

For more information about Package 1 on Improving the NEM access standards, visit its project page. For more about Package 2, or to provide feedback, visit the Package 2 project page.

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