New Jersey residents got some bad news earlier this year when the state’s public utilities board warned that their electricity bills could surge up to 20% starting on June 1. A key driver in that rate hike: data centers.
The spread of these large-scale computing facilities across the U.S. amid growing demand for artificial intelligence, data storage and other technology services is projected to increase electricity consumption to record highs in the coming years, according to experts.
A report from Schneider Electric, a company that specializes in digital automation and energy management, projects that electricity demand will increase 16% by 2029, mainly due to the proliferation of data centers. Most data centers rely on the nation’s electrical grid for energy, meaning it will be Americans ratepayers who pick up the tab, Mark Wolfe, executive director of the
National Energy Assistance Directors Association, a group that represents states on energy issues.
“As utilities race to meet skyrocketing demand from AI and cloud computing, they’re building new infrastructure and raising rates, often without transparency or public input,” he told CBS MoneyWatch in an email. “That means higher electricity bills for everyday households, while tech companies benefit from sweetheart deals behind closed doors.”
More data centers, more power
Thousands of data centers now dot the country, with the largest concentrations in Virginia, California and Texas. The number of data centers in the U.S. nearly doubled between 2021 and 2024, according to a report from Environment America, a network of environmental groups.
It’s not just the number of data centers that are expected to rise, but the size. “The trend has been bigger data centers,” Dave Turk, the former deputy secretary of the U.S. Department of Energy, told CBS MoneyWatch. “They tend to be more energy efficient.”
Spurring that expansion is the rapid growth of “generative” AI companies that are consuming vast amounts of electricity to train so-called Large Language Models like ChatGPT and power. AI searches use 10 times more electricity than normal internet searches, according to a study from the Electric Power Research Institute, a nonprofit organization.
“AI is an increasing part of data centers and certainly responsible for increased electricity demand,” Turk said.
Data centers, which contain thousands of computer servers, networking gear and other infrastructure, also require power to cool their systems and keep them from overheating.
