Data centers could use 11% of Australia's electricity by 2035: Melbourne looks for answers

Data centers are forecast to consume up to 11% of all of Australia's electricity by 2035. Melbourne is positioning itself as a global center for engineering solutions to the problem, bringing together university research, clean energy and digital infrastructure.

Why is 11% a systemic problem?

Growing AI workloads are turning electricity from an operating expense into a strategic constraint. According to CEFC and a 2026 survey by the IEEE Power and Energy Society, powering AI and digital infrastructure is one of the main engineering challenges of the coming decade.

It is not only a question of generation volume. Data centers create new load patterns: sharp, unpredictable and constantly growing. Traditional approaches to grid design do not suit these conditions. What is needed are systems with dynamic flexibility, built-in storage and real-time algorithmic optimization.

Engineers around the world highlight three priorities:

• Data centers: up to 11% of Australia's electricity consumption by 2035 (CEFC forecast)
• Aligning data center siting with available grid capacity and renewable sources
• Building in flexibility through energy storage and demand management
• Balancing the growth of digital infrastructure with decarbonization and grid reliability

What Melbourne is offering

The University of Melbourne has become the Australian technical lead in the EPICS consortium (Electric Power Innovation for a Carbon-Free Society), one of seven global climate and clean energy centers. EPICS partners are Johns Hopkins University and Imperial College London. It is the only one of the seven centers focused directly on future energy infrastructure.

The Department of Electrical and Electronic Engineering runs the Smart Grid Lab, a real-time laboratory for simulating power systems. Engineers test how solar panels, batteries, electric vehicles and other distributed resources interact in a virtual environment before full-scale deployment.

"AI load doesn't just increase computing requirements.

It puts new pressure on the underlying power systems. Designing them together is critically important," says Glen Farivar, senior lecturer in power electronics at the University of Melbourne.

Victoria, the state where Melbourne is located, has built one of Australia's most developed energy sectors: renewable generation, industrial batteries and grid modernization already work together rather than in isolation.

The 2027 IEEE PES GTD Asia conference

In 2027, Melbourne will host the IEEE PES Generation Transmission and Distribution Asia Conference and Exposition. It is one of the key international venues for engineers, grid operators, researchers and regulators working on power systems.

The organizing committee includes specialists from the University of Melbourne, Monash University and the Australian Energy Market Operator (AEMO). Professor Pierluigi Mancarella, EPICS director on the Australian side, describes the scale of the task:

"Developing future power systems that are affordable, sustainable and reliable at the same time is a truly global challenge.

Optimizing how power grids interact with AI and digitalization requires international cooperation."

What this means

Power supply is no longer a background issue for the AI industry. It is becoming a key factor limiting its scaling. The hubs that can combine engineering expertise, clean generation and smart grids will shape the geography of the AI economy in the next decade.