Soaring Energy Costs Target AI and Data Centers

As technology companies pursue extensive new data centers, public concern over rising electricity costs is also escalating. A recent survey by solar company Sunrun reveals that 80% of consumers fear the impact these facilities will have on their utility bills.

Concerns Over Rising Electricity Demand

Electricity demand in the United States remained stable for over a decade. However, in the last five years, commercial electricity usage increased, especially among data centers and industrial users. This growth has risen by annual percentages of 2.6% and 2.1% respectively, while residential electricity consumption only grew by 0.7% annually.

The Increasing Share of Data Centers

• Data centers currently account for about 4% of the total electricity generated in the U.S.
• This figure is more than double the share recorded in 2018.
• By 2028, consumption could rise to between 6.7% and 12%, according to predictions from the Lawrence Berkeley National Laboratory.

New renewable energy sources, notably solar and wind, have been bolstering generation capacity to meet this rising demand. Big tech companies are increasingly signing contracts for utility-scale solar projects, attracted by their affordability and swift deployment. Typically, a solar project can begin supplying power within 18 months.

Future of Renewable Energy

The U.S. Energy Information Administration (EIA) anticipates that renewables will dominate new generating capacity for at least the next year. However, regulatory challenges are expected to hinder future growth. Specifically, the potential repealing of key components of the Inflation Reduction Act by Republican lawmakers could limit renewable energy expansion.

Challenges in Natural Gas Supply

• Natural gas has not fulfilled its expected role in meeting energy needs for data centers.
• Many new supplies are directed towards exports rather than domestic consumption.
• Electricity generators’ consumption of natural gas increased by 20% from 2019 to 2024.

Moreover, significant delays in constructing new natural gas power plants are anticipated. The International Energy Agency estimates that such facilities require about four years to complete. Compounding the issue are supply chain setbacks, with manufacturers predicting turbine delivery dates up to seven years out.

The Role of AI in Electricity Demand

While industrial users have increased electricity consumption, AI-driven data centers have garnered public attention. A Pew survey indicates that many consumers view AI with concern rather than excitement. Many employers utilize AI for workforce reductions, exacerbating public skepticism towards the technology.

With rising energy prices further complicating the situation, a backlash against data centers and AI is likely to intensify. As consumers grapple with escalating electricity costs, their anxieties about the rapid growth of AI and data centers are increasingly becoming a focal point of discussion.