Consumers are increasingly concerned that an AI gold rush will ultimately lead to higher electricity bills, as tech companies tout plans for massive new data centers, a new survey finds.
The report, commissioned by solar installer Sunrun, found that 80% of consumers are concerned about the impact data centers will have on their utility bills.
Consumers’ concerns are not unfounded.
According to the U.S. Energy Information Administration (EIA), electricity demand in the United States has remained stable for more than a decade. Over the past five years, commercial and industrial users, including data centers, have become more deeply involved with the grid, with annual growth rates of 2.6% and 2.1%, respectively. On the other hand, the annual growth rate for residential use was only 0.7%.
Data centers currently consume approximately 4% of the electricity generated in the United States, more than doubling their share in 2018. According to Lawrence Berkeley National Laboratory, consumption is expected to increase from 6.7% to 12% by 2028.
Power generation has managed to meet demand thanks to a surge in new capacity from solar, wind and grid-scale battery storage. Big tech companies are signing major contracts for new utility-scale solar power, especially attracted to the energy source’s low cost, modularity, and speed of power delivery. Solar power plants can begin powering data centers before completion, and new projects typically take about 18 months to complete.
EIA expects renewable energy to account for the majority of new generation capacity until at least next year. This trend is likely to continue beyond 2026, but experts predict that if Republicans repeal key parts of the anti-inflation law, it will hamper the growth of renewable energy.
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Meanwhile, another energy source favored by data center operators, natural gas, has not yet had its moment. Production is increasing, but most of the new supply is going to feed for export rather than the domestic market. Consumption by power producers increased by 20% between 2019 and 2024, while consumption by exporters increased by 140%.
According to the International Energy Agency, a new natural gas power plant will also take about four years to complete, so it won’t be ready in time. The problem is further exacerbated by the inventory of turbines used in gas-fired power plants. Manufacturers are estimating delivery times up to seven years away, and the newly announced capacity is unlikely to change that.
The slow growth of natural gas, combined with the depletion of renewable energy, is putting data center developers in a bind.
Although AI and data centers are not entirely responsible for the increase in power demand, industrial users are feeling the thirst for power as well. They lead the news headlines.
AI is likely to be the focus of consumer anger, with Pew research finding more people are concerned than excited about the technology. This is not surprising, given that many employers utilize this tool as a means of downsizing rather than increasing employee productivity.
Add to that the rise in energy prices, and you begin to see how a rebound is occurring.
