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 now 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 last year projected 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 — like most of us — are paying for the data center buildout
Advocates on behalf of 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. And 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. And 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.
“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.
But 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, so there may be some double-counting driving up demand forecasts, as well. And even the facilities that do get built may not need all the electricity that they requested as computing hardware gets 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.
And all of this could be very expensive for ordinary people. In other power markets with a lot of new data centers in recent years — places such as Phoenix and Chicago — monthly wholesale electricity prices rose 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 expensive now, Lapp is hoping to start the process of creating reforms in PJM to keep prices under control.
In an emailed statement, PJM spokesperson Jeffrey Shields told Vox that the grid operator agrees that it’s crucial to try to get as accurate a picture of demand growth as possible. Unfortunately, that’s a tough thing to do. PJM doesn’t directly interact with power customers. That’s the job of utilities, and they need to be the ones tracking how much power their users actually need.
For its part, PJM is working on ways to get a sharper picture of the future, including requiring data center developers to disclose the full scale of their projects in multiple areas and developing a more thorough review process for requests for more power.
Once they’re online, data centers can actually be a boon for the power grid. They’re ratepayers, too, and their bills can start paying back the costs of the new infrastructure, which can boost reliability across the grid. Data centers don’t necessarily have to run flat out all the time, and many come equipped with their own backup power systems, so they can be optimized to run when power is especially cheap and help make the grid more stable on balance. Some tech companies are also constructing their own generators to keep their giant boxes humming. But that’s only if they get built at all.
“When [data centers] do come online, they’re going to contribute by paying for the system,” Lapp said. “But if half of them don’t come online, then there’s going to have been a lot of costs that are incurred. … Those costs get shifted onto existing customers, so existing customers are taking on a ton of risk with these forecasts.”
There is a key way to lower the power bill for ordinary people, though. Julia Kortrey, deputy state policy director at Evergreen Action, a climate policy advocacy group, said one way to limit electricity speculation is to force tech companies to put more skin in the game.
“We can put incentives like requiring data center developers to put down a deposit or some type of financial commitment,” Kortrey said. “That would help reduce the number of double proposals or over-speculation.” Shields, the PJM spokesperson, said the grid operator is working on recommendations for utilities to “require financial commitments from large load customers based on the additional capacity PJM is required to acquire on their behalf.”
Consumer electricity prices are still likely to rise further, and more power-chugging data centers will crop up, but tamping down on rampant speculation of future demand could make power bills more manageable.
Otherwise, rising energy prices will be an even bigger drag on the economy, and more people will struggle to keep the lights on.
