Electricity Prices are Going Up, and AI Is to Blame

Gizmodo

8 hours ago

Your electricity bill has likely gone up over the course of the past year. That's because you're effectively paying an AI tax. According to a report from Axios, the cost of electricity is climbing across the country, driven primarily by the increasing energy demands of massive data centers being built to train and run AI models.
Data from the U.S. Energy Information Administration showed the cost of 1 kilowatt-hour of electricity rose from 16.41 cents to 17.47 cents over the course of the past year, a 6.5% increase. But on a state-by-state level, residents are seeing their electrical bills skyrocket. Maine saw electricity prices jump 36.3%, Connecticut's climbed by 18.4%, and Utah saw a 15.2% bump.
That is at least in part because of the data centers that are being stood up as quickly as possible by tech companies who are all in on AI. A recent report from the think tank RAND Corporation estimated that global power demand from AI data centers could hit 327 gigawatts (GW) by 2030—about 30% of the United States' current grid capacity of 1,280 GW.
The demands of existing and proposed data center projects is already stressing the grid and its operators. In the mid-Atlantic region, which has become known as 'Data Center Alley' because of the sheer number of facilities that operate there, prices are projected to rise after a recent capacity auction designed to ensure there is enough power generation available to meet demands saw prices skyrocket. An estimated 60% of that price increase was attributed to data centers by one report, which found that $9.3 billion will ultimately be passed along to customers—mostly residents.
It's not just the cost of the energy itself that is causing the price surge. It's the cost of building out the grid so quickly, too. According to Axios, the cost of those buildouts is being passed on to consumers, and there is currently a lot of demand for grid operators to build faster. Per the Lawrence Berkeley National Laboratory, grid connection requests at the end of 2023 were already more than double the US grid's existing energy capacity.
It seems at least a little strange that the wealthiest companies on the planet and startups valued at multiple billions of dollars expect residents to foot the bill for their ambitions. Google, at least recently, signed an agreement to curb its energy usage from data centers during peak hours, but it also plans to pour $25 billion into data center projects. Firms like Meta are also powering ahead with massive data centers for their own AI initiatives. Meanwhile, it seems like we're all stuck subsidizing their power bills as they hold a gun to the head of the broader economy.