Rising energy prices put AI and data centers in the crosshairs
As tech companies tout their plans for massive new data centers, consumers are increasingly worried the AI-driven gold rush will ultimately drive up the price they pay for electricity, according to a new survey.
The report, commissioned by solar installer Sunrun, found that 80% of consumers are worried about the impact of data centers on their utility bills.
Consumers’ concerns aren’t unfounded.
Electricity demand in the United States held steady for over a decade, according to the U.S. Energy Information Administration (EIA). Over the last five years, commercial users including data centers and industrial users began drinking more deeply from the grid, with annual growth rising 2.6% and 2.1%, respectively. Meanwhile, residential use only grew by 0.7% annually.
Data centers today consume about 4% of the electricity generated in the United States, more than double their share in 2018. By 2028, consumption is forecasted to rise to 6.7% to 12%, according to Lawrence Berkeley National Laboratory.
Generation has managed to meet demand thanks to a surge in new capacity from solar, wind, and grid-scale battery storage. Big tech companies have been inking large deals for new utility-scale solar, in particular, attracted by the energy source’s low cost, modularity, and speed to power. Solar farms can start delivering power to data centers before they’re completed, and a new project typically takes around 18 months to complete.
The EIA expects renewables to dominate new generating capacity through at least the next year. The trend likely would have extended beyond 2026, but experts predict a Republican repeal of key parts of the Inflation Reduction Act will hamper the renewables’ growth.
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Meanwhile, natural gas, another source of energy favored by data center operators, hasn’t met the moment. Production has been rising, but most of the new supplies have gone toward feeding exports rather than the domestic market. Consumption by electricity generators rose by 20% between 2019 and 2024, while exporters consumed 140% more.
New natural gas power plants won’t be ready in time, either, since they take around four years to complete, according to the International Energy Agency. A backlog of turbines used by gas-fired power plants has only compounded the problem. Manufacturers are quoting delivery dates up to seven years out, and newly announced production capacity is unlikely to change things.
Slow natural gas buildouts coupled with kneecapped renewables have put data center developers in a bind.
While AI and data centers aren’t entirely responsible for increasing electricity demand — industrial users have been nearly as thirsty — they’ve been leading the headlines.
AI is likely to be the focus of consumers’ ire: More people are concerned about the technology than excited about it, according to a Pew survey. No surprise given that many employers have been wielding the tool as a way to cut headcount rather than improve augment employee productivity.
Throw rising energy prices into the mix, and you can begin to see how a backlash might be brewing.
Tim De Chant is a senior climate reporter at TechCrunch. He has written for a wide range of publications, including Wired magazine, the Chicago Tribune, Ars Technica, The Wire China, and NOVA Next, where he was founding editor.
De Chant is also a lecturer in MIT’s Graduate Program in Science Writing, and he was awarded a Knight Science Journalism Fellowship at MIT in 2018, during which time he studied climate technologies and explored new business models for journalism. He received his PhD in environmental science, policy, and management from the University of California, Berkeley, and his BA degree in environmental studies, English, and biology from St. Olaf College.
You can contact or verify outreach from Tim by emailing tim.dechant@techcrunch.com.
