AI data centers trigger 76% electricity price spike as federal watchdog demands tech giants pay

AI data centers trigger massive 'irreversible' 76% electricity price spike in largest US region -- federal watchdog demands tech giants pay for their own power infrastructure

Data centers are skewing the power supply market, resulting in higher prices for everyone. Monitoring Analytics, the federally mandated independent watchdog that keeps an eye on the critical PJM Interconnection that distributes power around the U.S., said in a new report [PDF] that a massive 75.5% increase in power costs in the largest region of the U.S. has been directly caused by data centers, and it also blamed the regional market operator for failing to keep up with the rising demand. The price increases have been steep; wholesale electricity prices went up from $77.78 per MWh in the first quarter of 2025 to $136.53 per MWh in the same period of this year. "The price impacts on customers have been very large and are not reversible," the watchdog said in the report. "The price impacts will be even larger in the near term unless the issues associated with data center load are addressed in a timely manner, prior to the next BRA (base residual auction), scheduled for June 2026." Monitoring Analytics says that PJM Interconnection is trying to rewrite the rules for the capacity market and bake in data center demands into its forecasts. The watchdog is critical of this proposal as it will raise the prices for all electricity consumers, putting an unnecessary burden on households and small businesses. There is a possible solution to this problem: make data centers and other major consumers negotiate directly with power producers instead of mixing that demand with the BRA. This auction is where capacity is sold some three years ahead of when it's needed, and including data center demand in the BRA will push prices up for everyone. In fact, the report says that without the AI infrastructure built out, the PJM Capacity Market would not have seen the high prices we're experiencing now. So, by making data centers negotiate directly with power producers, this will ensure that the expanded capacity is solely shouldered by these large consumers and help keep utility bills stable for everyone else. However, this is not within the interests of PJM Interconnection. After all, by keeping massive data center loads baked into the general capacity forecast, the power auction would result in higher prices as demand moves up, but supply stays at relatively the same level. This higher cost, in turn, would then be passed on to transmission operators and local utilities, eventually making its way into the bill of the individual consumer. The increasing backlash against data center development, particularly its impact on electricity prices, has caught the attention of the federal government. In March of this year, President Donald Trump gathered some of the country's biggest AI hyperscalers in the White House and made them promise that they would "pay their own way" when it comes to AI infrastructure costs. This is, in principle, what Monitoring Analytics is pushing for: have tech companies pay for their own power -- both the electricity they consume, and the infrastructure needed for it. Unfortunately, the "ratepayer protection pledge" is nothing but a promise, and it cannot force institutions like PJM Interconnection to not pass on the burden of cost to the average American unless Congress passes a federal law that forces the Federal Energy Regulatory Commission (FERC) to prevent cost-shifting. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Power Prices in Eastern U.S. Spike 76% Thanks to AI Data Centers

America's largest power grid is under enormous strain from AI data centers. And a new report details how wholesale electricity prices have jumped nearly 76% in an area where tens of millions of Americans live. PJM Interconnection operates a wholesale electric power market in the mid-Atlantic, Midwest, and South that covers 67 million people in 13 states (Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia). That's nearly 20% of the U.S. population, and it's also an area with a lot of data centers. Power prices there averaged $136.53 per megawatt-hour in the first three months of 2026, according to a massive new report from Monitoring Analytics. That's up from $77.78 per megawatt-hour in the first three months of 2026. The report isn't shy about where we should put the blame: "Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices." The report, first spotted by Bloomberg, warns that there simply isn't enough capacity to meet the demand from data centers that have been built to power the AI revolution. "The current supply of capacity in PJM is not adequate to meet the demand from large data center loads and will not be adequate in the foreseeable future. This is a simple factual issue," the report explains. There's no easy way to reverse this trend, according to Monitoring Analytics. It's just going to be the reality for the next couple of years: "Large data center load additions have already had a significant and irreversible impact on PJM customers that will be paid through May 31, 2028, and will have additional significant impacts on other customers as a result of higher transmission costs, higher energy market prices and higher capacity market prices." The power mix has shifted slightly, with less dependence on coal and wind, but more on oil and solar, according to the report: "In the first three months of 2026, generation from coal units decreased 1.7 percent, generation from natural gas units increased 4.2 percent, generation from oil units increased 43.2 percent, generation from wind units decreased 4.7 percent, and generation from solar units increased 15.0 percent compared to the first three months of 2025." AI data centers are incredibly unpopular in the U.S., with 71% of Americans saying they oppose the construction of data centers in their area, according to a new poll from Gallup this week. Of that 71%, 23% say they're just somewhat opposed, while 48% say they are strongly opposed. Incredibly, more Americans say they'd rather live next to a nuclear power plant than a data center. A relatively small 53% of Americans oppose the development of nuclear power plants in their area. Among those polled, 50% cite the heavy strain on local resources, including many who are concerned about the way that data centers use electricity and drive up prices.

Data centers could drive a major spike in U.S. power emissions

U.S. electricity demand stayed nearly flat for almost two decades. Utilities planned around that stability, and major rate increases were relatively rare. Whatever else was happening in the economy, the electricity system was reliably, almost boringly stable. Something shifted over the past two years, and a new analysis now shows what that change could mean for the future of the U.S. power grid. Depending on where you live, your power bill could climb by roughly 10 percent - or by more than half - by 2030. The difference comes down to a single question: how many server buildings are going up near you. Two industries drove the break: data centers and cryptocurrency mining - both industrial-scale computing operations that draw electricity constantly, around the clock. Jeremiah Johnson, an associate professor of civil, construction, and environmental engineering at North Carolina State University (NC State), led the research. Johnson and his team from four universities wanted to find out what that data center surge will mean for everyone else's power bills. The team ran an energy system optimization model - a tool that searches for the cheapest legal way to keep the lights on. It divided the country into 26 grid regions and tracked supply and demand hour by hour through 2030, including which new plants would be built, where they would be built, and how hard they would run. Inputs covered existing climate rules, transmission limits, regional weather, and uncertain fuel costs. That allowed the team to test several futures side by side and measure what each would do to bills and emissions. Nationally, electricity costs could land roughly 6 to 29 percent higher by 2030, depending on the scenario. In hot spots, the jump could reach 57 percent. A recent study projects U.S. data center power consumption to roughly double by 2030, with artificial intelligence accounting for nearly half the growth in domestic electricity demand. About ten states face the worst of it. Virginia leads because of its existing concentration of server farms. Most of the rest cluster along the Mid-Atlantic and Ohio Valley, with West Texas the lone Western entry. This is not random geography. These regions host concentrated server clusters or sit on shared transmission lines - the network of wires and substations that move power across states. When a single customer draws as much electricity as a small city, everyone else on that network feels the price impact. Northern Virginia offers the strangest snapshot in the model. The modeling suggests coal plants there could run harder to meet surging server demand. Texas takes the other route, leaning almost entirely on natural gas. Across the power grid as a whole, both fuels expand. That mix sends the climate trend backward. A separate study found the U.S. power sector cut its carbon dioxide emissions by nearly a third between 2005 and 2017, mostly by retiring coal plants and adding renewable energy. Data centers could erase a meaningful portion of that progress by 2030 alone. Power sector carbon emissions could climb by up to 28 percent over the next three and a half years compared to a future with no data center growth. Most of that increase comes from coal and gas plants running harder. "The power sector has made progress in reducing carbon emissions over the past 20 years, but the increased demand will essentially erase a lot of that progress," Johnson said. Fuel prices throw a long shadow over the results. The model's bottom line depends heavily on what natural gas costs through 2030. The relationship between fuel prices and emissions also runs counter to intuition. Cheap gas usually trims emissions because it displaces coal. With data centers added to the equation, the math flips. Cheap gas gets pulled toward feeding new servers, so coal plants keep running and the carbon impact grows. Expensive gas does the opposite - more renewables fill the gap, and the climate damage shrinks. A separate estimate places cryptocurrency mining alone at somewhere between one-half and two percent of total U.S. electricity use as of 2023. Geography holds a small piece of good news. Distributing new data centers across more states would soften the worst regional price spikes, the model shows. National averages barely move. Bills go up either way, just less unevenly. Restoring federal renewable incentives would also temper both cost and emissions effects, the team found, by pulling new construction toward wind and solar instead of gas and coal. Until this work, no one had stitched together a national hour-by-hour picture of what the data center boom does to household bills and climate emissions at the same time. The answer is straightforward. Prices rise everywhere, sharply in about ten states, and two decades of climate progress in the power sector get partly undone. "The public and policymakers need to be aware of these near-term challenges - 2030 is less than four years away," Johnson said. Utility regulators, state legislators, and grid operators face decisions about where new servers plug in, what kind of plants feed them, and who absorbs the cost. Those choices will reach much further than the data center fence line. Like what you read? Subscribe to our newsletter for engaging articles, exclusive content, and the latest updates.

Americans' AI hate wave might just be gathering steam: Data centers could hike power costs in some states over 50% by 2030 | Fortune

For years, the American power grid was a bastion of predictable stability. Throughout the 2010s, U.S. electricity demand remained flat as efficiency gains and declines in energy-intensive sectors such as manufacturing helped obscure the dawning digital age. But the power grid as it once was might be no match for the technological demands of the 2020s. Retail electricity prices have soared in recent years, an increase fast outpacing inflation over the same period, in part due to the rising power costs associated with the artificial intelligence-driven infrastructure boom. Electricity costs have been one of the factors fueling the recent nosedive AI has taken in public polling, and a new study suggests residential utility pain tied to the technology needs of this decade might be just getting started. Between 2018 and 2023, the share represented by data centers in total U.S. electricity use rose from 1.9% to 4.4%, according to a study published last week in the journal Environmental Research Letters. By the end of the decade, the national average wholesale electricity cost could rise between 6% and 29%, according to the study, which modeled several different energy use scenarios based on existing power demand forecasts. This increase in utility prices is primarily tied to data center expansion, with cryptocurrency mining also included in the modeling of higher costs. In some areas, those price hikes could be even steeper. In Virginia, for example, one of the epicenters of the country's data center boom, electricity generation costs could spike as much as 57%. Grid power directed to data centers surged 22% last year, according to S&P Global research, and could account for up to 17% of all U.S. electricity usage by the end of the decade. To meet that demand, the study's modeling projects that utilities will lean heavily on natural gas -- a fuel source whose price volatility adds its own layer of uncertainty to future consumer costs. Jeremiah Johnson, an associate professor of civil and environmental engineering at North Carolina State University and lead author of the study, also found that data centers were likely to turn in part to underutilized coal plants to supply their energy needs. Data center expansion could in fact push CO2 emissions from electricity generation up as much as 28% by 2030, according to the study, reversing some of the power sector's work over the past two decades to retire coal. Renewable energy would also play an important role in meeting that demand, although wind and solar's ability to compensate has grown heavily dependent on policy. The study modeled scenarios both with and without federal clean energy incentives comparable to those established under the Inflation Reduction Act -- subsidies that Congress largely repealed earlier this year. In the absence of those incentives, natural gas would supply roughly 70% of the additional generation needed to power new data centers, with coal, wind, and solar splitting the remainder. Restore those incentives, and natural gas's share drops to around 41%, with wind picking up 29% and solar 15% of the incremental load. The energy mix matters for costs as much as for emissions. The study found that in regions where renewable development is slow or constrained, such as Virginia, legacy fossil plants stay online longer and consumers will likely have to import power from neighboring states, pushing wholesale costs higher for everyone on the grid. "The challenge here is the magnitude of this demand we're talking about is really big. It's at a scale that dwarfs some of the other changes we've experienced to the power sector in recent years," Johnson told Fortune. "It's a little bit of an all-hands-on-deck to get the generation necessary to meet that magnitude of demand." With electricity prices expected to surge, economic anxiety among American households is already starting to show up in public opinion. In 2025, utilities requested states to approve a record $31 billion in rate increases across the country. While electricity prices have been rising well before the current data center boom -- spurred in part by investments towards modernizing grid infrastructure and improving weather resilience -- AI and the related infrastructure buildout have emerged as a clear scapegoat. Seven in 10 Americans push back against the idea of an AI data center being built close to their home, according to Gallup polling released last week. The primary source of concern was how construction would affect local resources, including electricity usage. 15% of respondents specifically mentioned fears over higher utility and energy costs. The results are part of a larger souring of opinion towards AI, with other recent polling by YouGov and The Economist finding that more than half of Americans say AI development is happening too fast, and that the technology is largely unlikely to deliver significant universal economic gains. The pushback has manifested as a rising number of communities across the country begin protesting and blocking data centers. Last year alone, opposition stalled or halted more than $156 billion in planned construction spanning 48 data center projects, according to the research firm Data Center Watch. "There's been lots of local pushback on siting data centers, and this finding that we have where proximity to these large centers leads to local increase in power bills, I think will make the siting processes more contentious and more important," Johnson said. "I think it's a really important aspect of the siting to understand who pays for the increased costs associated with power generation, and who bears the benefits."