Deep transition reshapes NSW’s energy future

With the nation’s economic prosperity clearly linked to meeting the challenges of a rapidly evolving energy ecosystem, Transgrid’s network planners are helping businesses, investors and energy consumers navigate a complex supply and demand challenge, described as the ‘deep transition’.

Transgrid CEO Brett Redman said the rapidly changing energy landscape requires new ways of thinking about electricity planning, particularly the demand stemming from AI and data centres.

"Data centres are set to become one of the biggest drivers of electricity demand in NSW, combining with household batteries, rooftop solar and electrification to reshape how Transgrid plans for an increasingly dynamic energy future," Mr Redman said.

Transgrid's Transmission Annual Planning Report (TAPR) 2026 outlines the pipeline of work required to support NSW's energy system as the state’s energy supply moves from around 40% renewable energy today to 90% by 2035.

The report forecasts demand from data centres will be four times higher than projected just one year ago, accounting for 66% of growth in end-use electricity consumption by 2035.

"As we progress towards a more connected energy system, the way we plan for the future must evolve alongside it," Mr Redman said.

"Hyperscale data centres are reshaping energy demand across the network, while rooftop solar, household batteries and electrification are fundamentally changing how electricity is used. As a result, the demand forecasts we are working with today look very different to those only a few years ago.

"While the energy system involves more moving parts than ever, our objective remains simple: keeping electricity reliable, secure and affordable while supporting NSW’s continued growth."

As data centres grow from around 3% of peak demand today to 20% by 2035, households and businesses are expected to install a further 6 GW of rooftop solar and 7 GWh of battery storage, creating a vastly more dynamic energy system.

By 2035, with its coal-fired generation capacity nearing full retirement, NSW is expected to require more than 26 GW of additional utility-scale wind and solar generation supported by around 11 GW of utility-scale storage.

With interest from data centres continuing to grow at pace, the report includes a new map that helps identify where that growth can be accommodated most efficiently.

"This will help support investment and jobs in surrounding areas while ensuring households and businesses aren't asked to fund infrastructure required by new large users," Mr Redman said.

Mr Redman said the success of the transition would ultimately be measured by the outcomes it delivers for households, businesses and communities.

"If we plan and deliver well, consumers will benefit from a cleaner, more reliable and lower-cost electricity system," he said.

"At the same time, NSW will have a stronger transmission backbone capable of supporting new industries, attracting investment and powering long-term economic growth in a post-coal economy."

Media enquiries: James Atkinson – 0475 965 030