As tech companies tout plans for massive new data centers, consumers are increasingly concerned that the AI-driven gold rush will ultimately drive up the price they pay for electricity, according to a new survey.
The report, commissioned by solar installer Sunrun, reveals that 80% of consumers are concerned about the impact of data centers on their utility bills.
Consumer concerns are not unfounded.
Electricity demand in the United States has remained stable for more than a decade, according to the U.S. Energy Information Administration (EIA). Over the past five years, commercial users, including data centers and industrial users, have started to consume more of the network, with annual growth of 2.6% and 2.1%, respectively. Meanwhile, residential usage has only increased 0.7% per year.
Data centers consume about 4% of electricity generated in the United States today, more than double their share in 2018. By 2028, consumption is expected to reach 6.7 to 12%, according to the Lawrence Berkeley National Laboratory.
Generation has managed to meet demand through an increase in new capacity from solar, wind and grid-scale battery storage. Large technology companies have signed large contracts for new large-scale solar systems, in particular, attracted by the low cost, modularity and speed of power of the energy source. Solar farms can begin providing electricity to data centers before they are completed, and a new project typically takes about 18 months.
The EIA expects renewables to dominate new generation capacity at least over the next year. The trend would likely have extended beyond 2026, but experts predict that Republicans’ repeal of key parts of the Inflation Reduction Act will hamper the growth of renewable energy.
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Meanwhile, natural gas, another energy source favored by data center operators, has yet to measure up. Production has increased, but most of the new supplies have been aimed at supplying exports rather than the domestic market. The consumption of electricity producers increased by 20% between 2019 and 2024, while that of exporters consumed 140% more.
New natural gas power plants will also not be ready in time, as they will take around four years to build, according to the International Energy Agency. The backlog of turbines used by gas-fired power plants has only made the problem worse. Manufacturers are announcing delivery times of up to seven years, and the newly announced production capacity is unlikely to change the situation.
The slow expansion of natural gas, coupled with renewable energy, has put data center developers in a bind.
While AI and data centers aren’t entirely responsible for increasing electricity demand (industrial users are almost as thirsty), they are making headlines.
AI is likely to be the focus of consumer anger: More people are concerned about the technology than excited about it, according to a Pew survey. This is not surprising given that many employers use this tool as a way to reduce headcount rather than improve employee productivity.
Add to that rising energy prices and you can start to see how a backlash could be brewing.
