AI demand could drive up US electricity bills – even if it fizzles

Tech companies’ artificial intelligence ambitions will require a massive expansion in electricity-hungry data centres. This surging demand risks raising electricity bills for everyone – even if some data centres are never built.

US utility companies are rushing to build more power plants, transmission lines and gas pipelines to meet the rapidly growing electricity requirements of data centres. Residential electricity costs in the US have already increased nearly 30 per cent since 2021 – faster than inflation – according to a report by PowerLines, a US non-profit organisation focused on utility regulation. The past two years alone saw nationwide electricity bill increases of $10 billion each year.

Now a new report commissioned by the Southern Environmental Law Center, an environmental non-profit organisation based in Virginia, warns forecasts of electricity use overestimate the demand from speculative data centre plans, which could drive utility costs even higher. In particular, developers often submit redundant requests for electrical service in multiple regions for each data centre project – before ever committing to one location.

“If the projected data centre load doesn’t fully materialise – which all evidence and, frankly, common sense at this point is pointing to – ratepayers will ultimately bear that economic burden of the unnecessary and underutilized gas and electric infrastructure,” says Megan Gibson at the Southern Environmental Law Center.

Former executives from companies like Google and Meta have themselves acknowledged the practice of making redundant requests for data centre electricity is common, the report notes. “Tech executives have said the quiet part out loud already,” says Gibson. New Scientist reached out to Amazon, Google, Meta and Microsoft about their data centre development plans, but did not receive any additional comments.

The inflated estimates become clearer when taking all US data centre projects announced for 2025 through 2030 into consideration. Together, they would require 90 per cent of the global chip supply – despite the US currently accounting for less than 50 per cent of global chip demand. “It would be highly unlikely that all the world’s chips would go to this subset of the US,” says Marie N Fagan at London Economics International, a global consulting firm headquartered in the US and Canada, whose team prepared the report.

To ease the burden for ordinary ratepayers, “states must require utilities to sign contracts with potential data centre customers that put this risk on the data centres”, says Ari Peskoe at Harvard Law School, who is an advisor for PowerLines.

Some state governments are starting to act. On 9 July, Ohio state regulators ordered large data centre customers of Ohio’s largest utility company must pay at least 85 per cent of their subscribed electricity load – even if their actual electricity consumption fell below that point. Georgia state officials also adopted a rule that aims to prevent data centre development from burdening other ratepayers.

“The data centre industry is committed to paying its full cost of service for the energy it uses, including transmission costs,” says Aaron Tinjum at the Data Center Coalition, an industry association based in Virginia. “It is critical to ensure fair and equitable electricity rates for all customers.”