Your Rising Electricity Bill: The Role of Data Centers
Your electricity bill is rising. Naturally, you’re mad about it and looking around at who to blame. But it’s not a who, it’s a what — and the recent AI-driven data center construction spree is at least partly the reason why.
Copious data centers have sprung up across the United States, nearly doubling in number between 2021 and 2024, with no end in sight to their rapid spread. According to consulting firm McKinsey & Company, companies are projected to spend $1.6 trillion on data center hardware in the US by 2030.
It’s not just the existing facilities that are creating heftier bills; even data centers that have yet to be built are driving up power prices today.
These imposing, flat-walled, near-windowless buildings are filled with processors, hard drives, and memory chips that devour electrons. Today, some of the biggest tech companies in the world are racing each other to secure more computing facilities and the energy to power them as they scramble to dominate the AI sector. BloombergNEF, an energy research firm, estimates that data centers will consume more than double their current share of electricity by 2035, accounting for nearly 9 percent of all US electricity demand. The US Department of Energy projected last year that data centers could devour upward of 12 percent of the country’s total electricity production as soon as 2028.
- Household electricity bills are climbing across the US, partly because of the explosion of power-hungry data centers.
- Tech companies are scrambling to lock in more electricity for their planned computing facilities, even ones that might never get built.
- That rush for energy is already driving up today’s power and infrastructure costs.
- Maryland’s consumer advocate says it’s time for grid operators to step in and stop this kind of energy speculation before it hits customers even harder.
“Large loads have always existed, but they tended to be much smaller. A large load might be 10 to 50 megawatts,” said Pieter Mul, an associate partner at PA Consulting. “Now, data centers are consuming hundreds of megawatts at a time.”
“You have this large mismatch between not just the willingness to pay but also the speed and volume at which these data centers want to interconnect,” he added. “It’s running at a pace far ahead of the supply’s ability to meet that load.”
And that mismatch is a recipe for soaring electricity prices.
Last week, Maryland state’s legal representative for utility customers sent a letter to its regional grid operator, PJM, asking them to halt a “land rush” for electricity from data centers that is increasing power bills for households.
Marylanders are getting unhappier about their power bills, and this request is a significant escalation in the consumer-driven backlash against the rapid expansion of the tech industry’s footprint.
Maryland’s Ratepayers Paying for Data Center Buildout
Advocates for Maryland’s ratepayers finally pushed back after, earlier this year, an auction for power capacity to meet peak demand in PJM’s territory set a new record high price, soaring 22 percent above its previous peak. They are already starting to raise monthly bills by about $16.
PJM is an important part of the US energy system. It’s the largest power grid operator in the US, serving 67 million people across 13 states and Washington, DC. It’s also a global hotspot for this expanding tech. The grid includes Loudoun County in Virginia, home to almost 200 data centers — the largest market for hyperscale data centers in the world.
Utilities are telling PJM they expect even more electricity demand from data centers. According to Maryland’s Office of People’s Counsel, PJM’s forecast for load growth by 2030 has nearly doubled compared to its previous forecast. The costs of building the infrastructure to support these new data centers are already getting baked into power prices, including in places that have seen little benefit from the race for more computing power.
A sign reading “No data center complex in Tucker county” is seen in the town of Davis, West Virginia. Opposition to data centers is growing in many parts of the US. Ulisse Bellier/AFP via Getty Images
“It’s totally unfair,” said David Lapp, who serves as People’s Counsel for Maryland. “All the laws and regulations that we have are set up for an entirely different scale and scope of growth and electricity demand, so we’re dealing with essentially antiquated rules.”
Lapp explained that tech companies are shopping around for favorable electricity prices from different utilities, trying to buy up as much power as they can at low prices. Those utilities, in turn, are telling grid operators like PJM how much electricity they’re going to need in the future. Just the speculation of increasing energy demand in the future is setting off a scramble for power that’s already manifesting in higher prices for ordinary people.
However, it’s unlikely that all of those data centers are going to get built, especially if the AI boom turns out to be a bubble or as companies consolidate. Some tech companies may also be soliciting electricity bids from multiple utilities for the same data center, which might lead to double-counting driving up demand forecasts. Additionally, even the facilities that do get built may not need all the electricity that they requested as computing hardware becomes more efficient.
This all means that ordinary households will end up holding the bag for the new power generators and transmission lines intended to support data center demand that may never arise.
In other power markets with a lot of new data centers in recent years — places such as Phoenix and Chicago — monthly wholesale electricity prices have risen dramatically, up by 267 percent.
Can Data Center Energy Speculation Be Reined In?
By raising the alarm about how predictions of future energy needs are making things more costly now, Lapp hopes to spark the process of reform at PJM to keep prices manageable.
In an emailed statement, PJM spokesperson Jeffrey Shields acknowledged the importance of accurately anticipating demand growth. However, achieving this is challenging. PJM doesn’t directly interact with power customers; that responsibility lies with utilities, which need to monitor actual user demand.
PJM is exploring ways to better forecast future needs, including requiring data center developers to disclose the full scale of their projects in multiple areas and creating a more thorough review process for additional power requests.
Once they’re online, data centers can actually benefit the power grid. They are ratepayers, too, and their presence can help recover the costs of new infrastructure, which can enhance grid reliability. Data centers don’t have to operate at full capacity all the time. Many come equipped with backup systems, allowing them to run when power is less expensive, stabilizing the grid overall. Some tech companies are also building their own generators to ensure consistent operation. But this depends on whether they’re established at all.
“When [data centers] do come online, they’re going to contribute by paying for the system,” Lapp noted. “But if half of them don’t materialize, then there’s going to have been a lot of costs incurred, which will ultimately get passed on to existing customers. The burden will fall disproportionately on those who are already connected.”
There is a crucial way to lessen power bills for ordinary consumers. Julia Kortrey, deputy state policy director at Evergreen Action, a climate policy advocacy group, suggested putting more responsibility on tech companies to mitigate electricity speculation.
“We can implement requirements like mandates for data center developers to put down a deposit or some type of financial commitment,” Kortrey advised. “This would reduce the instances of duplicate proposals or over-speculation.” Shields, the PJM spokesperson, mentioned that the grid operator is working on guidelines for utilities to “require financial commitments from large load customers based on the additional capacity PJM is required to procure on their behalf.”
Consumer electricity prices are likely to keep climbing, along with the establishment of more energy-hungry data centers. However, curbing rampant speculation regarding future demand could make electricity bills more manageable.
Otherwise, rising energy prices may pose a significant challenge for the economy, leaving many consumers struggling to keep the lights on.
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