New Jersey residents received some bad news earlier this year when the state's Utilities Commission warned that it could surge up to 20% from June 1. Important drivers for that rate hike: the data center.
Experts say that amid growing demand for artificial intelligence, data storage and other technology services, the widespread adoption of these large computing facilities across the US is projected to increase power consumption in the coming years to increase power consumption.
A report from Schneider Electric, a company specializing in digital automation and energy management, predicts that electricity demand will increase by 16% by 2029, primarily due to a surge in data centers. Most data centers rely on the country's electrical grid for energy. This means that it's an American fare payer who picks up the tab.
The National Energy Assistance Directors Association, a nationally representative group on energy issues.
“As utilities compete to meet the surge in demand from AI and cloud computing, they are often raising new infrastructure and rates without transparency or public input,” he told CBS Moneywatch in an email. “It means that electricity bills for everyday households will be higher, but tech companies benefit from closed-door lovers' dealings.”
More data centers, more power
Currently, thousands of data centers are dotted throughout the country, with the largest concentrations in Virginia, California and Texas. According to a report by Environment America, the network of Environment Groups, the number of data centers in the US almost doubled between 2021 and 2024.
It's not just the number of data centers expected to rise, but the size. “The trend was in bigger data centers,” Dave Turk said. The former deputy secretary of the U.S. Department of Energy told CBS MoneyWatch. “They tend to be more energy efficient. ”
Facilitating its expansion is the rapid growth of “generative” AI companies that consume vast amounts of electricity to train so-called large-scale language models such as ChatGpt and Power. According to a study by the nonprofit Electricity Institute, AI searches use 10 times more power than regular internet searches.
“AI is a growing portion of data centers and is certainly responsible for increasing electricity demand,” Turk said.
Data centers that include thousands of computer servers, networking gear and other infrastructure also need power to cool and prevent systems from overheating.
Torsten Sløk, chief economist at asset management company Apollo Global Management, estimates that the data center will need an additional 18 gigawatts of power by 2030.
About 4.4% of U.S. electricity was sent to electricity data centers in 2023, according to a Lawrence Berkeley National Laboratory study at the Department of Energy. Not all of that demand is related to AI, but it represents a part, the Turks said.
Other factors that drive prices up
The spread of data centers is not the only reason why US electricity prices are skyrocketing. Natural gas prices, inflation, the ongoing electrification of buildings and vehicles, and other factors also play a key role. However, the utility takes into account high demand from data centers into its pricing model.
For example, if Dominion Energy, one of Virginia's largest utilities, proposed a price increase of $8.51 a month in 2026 in April, the company also came up with the idea of a “new rate class for high energy users, including data centers.”
Recent data from the Labor Bureau shows that electricity prices rose 4.5% last year, It will increase sharply this summer. Republican-backed budget packages “Big Beautiful Building” It will be passed by President Trump and signed the law. Analysts at Rhodium Group predict that the bill to eliminate tax credit slates created under the Inflation Reduction Act could increase family energy spend nearly $400 a year.
Experts say that beyond price increases, the growing energy demand from data centers can also undermine the reliability of the grid. In a recent report, North American Electric Reliability Corp said facilities that serve AI and cryptocurrency companies are being developed at a faster pace than power plants and transmission lines, “which will reduce system stability.”
PJM, a grid operator in 13 states and Washington, DC, cited data center demand as one of the factors that could lead to a lack of capacity in its 2025 forecast.
