The rise of AI data centers sparks an electricity dilemma
Image: Jenny Kane
If your electricity bill spiked because of a warehouse full of AI servers that guzzle power faster than your nephew’s soccer team slamming Gatorade at halftime, you wouldn’t be too happy.
Now scale that up by thousands of megawatts, and you’ve got America’s data center dilemma.
Microsoft is one company pulling out all the PR stops. This week, the Copilot developer rolled out a “Community-First AI” plan that promises to cover the full electricity costs for its US data centers, so locals don’t get stuck with higher rates.
Microsoft’s five-part pledge includes:
- Covering full electricity costs to prevent utility rate hikes for nearby residents
- Minimizing water use and replenishing more than it withdraws
- Paying full property taxes on data center sites
- Creating local jobs in the communities that host data centers
- Funding AI training programs to boost regional workforce skills
It also unveiled a new water-recycling cooling system, already live in Wisconsin and Georgia, to reduce local strain in drier areas.
AI data centers are a growing point of contention
Communities from New Jersey to Kentucky are pushing back against the recent AI-fueled rise in data centers, which help drive up local electricity prices and stress an already aging US power grid.
- In some areas, electricity costs have soared nearly 267% over the past five years, with data centers often blamed for the surge.
- The load is still growing fast: overall US power demand in 2030 is projected to be 25% higher than it was in 2023—largely because of data center needs—after holding relatively steady for decades.
Potential solutions are controversial. In September, PJM, the America’s largest grid operator, floated plans to cut power to data centers during peak demand unless they build their own energy supplies. Microsoft, Amazon, and Alphabet have pushed back on the proposal, arguing the move could delay critical AI infrastructure projects and give countries like China a competitive edge.
Looking ahead…Microsoft says it’ll start implementing its promise to cover full electricity costs of its data centers by mid-2026.
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Sprinkles from the Left
- Others contend that America’s issue with rising electricity prices due to AI data centers can be solved by simply requiring the data centers to draw a little less power from the grid during the limited hours when it’s most strained.
- Some commentators argue that state and local lawmakers are correct to ask for guardrails before any AI data centers are approved in their areas, since their tendency to guzzle water and electricity often causes problems for Americans who live nearby.
- “A Simple Fix to America’s Soaring Electricity Prices” –Tyler H. Norris, NY Times
- “DeSantis has warned about AI data centers. Lawmakers can act — don’t let us down” –Miami Herald Editorial Board
- “Electricity bills are soaring — and flipping seats” –Theodore R. Johnson, WaPo
Sprinkles from the Right
- Some commentators argue that the solution to America’s data center and energy needs is for environmentalists to stop throttling the US energy supply and limiting the use of reliable coal generation and oil pipelines due to the “existential threat” of climate change.
- Others contend that businesses and consumers alike shouldn’t be paying more than they would otherwise for electricity in order to accommodate AI data centers, and that lawmakers should use that principle as their north star when responding to America’s data center and electricity issue.
- “They’re Coming for Our Data Centers” –Peter Huntsman, WSJ
- “Ready or not, the data centers are coming. We must keep our electric bills from soaring.” –Chicago Tribune Editorial Board
- “Mull data-nomics” –Toledo Blade Editorial Board
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