Electricity bills soar as AI drives data center expansion

In the United States, the demand for electricity is expected to surge significantly due to the proliferation of data centers driven by artificial intelligence (AI) technologies. According to a report from Schneider Electric, electricity consumption could increase by 16% by 2029. The rapid growth of 'generative' AI systems contributes to this trend as they require vast amounts of energy for training models like ChatGPT, which can consume 10 times more electricity than standard internet searches. These developments have raised concerns about the sustainability of power supply chains and the economic burden on consumers. The number of data centers across the U.S. has seen remarkable growth, nearly doubling between 2021 and 2024, contributing to greater electricity consumption. States such as Virginia, California, and Texas are witnessing the largest concentrations of these facilities. Utilities are responding to this demand by investing in new infrastructure but also raising rates that consumers will ultimately bear. Mark Wolfe, the executive director of the National Energy Assistance Directors Association, highlights that the burden of these increased costs will fall on everyday households, while tech companies often benefit from favorable agreements. The consequences of such energy demands extend beyond financial impacts; they present challenges to energy policy and the environment. As countries such as China prioritize reliable power for AI development, they have accelerated coal plant construction. Meanwhile, jurisdictions like Germany grapple with soaring energy prices and hesitant tech firms reluctant to establish data centers in high-cost regions. This geopolitical battle for AI supremacy mirrors past energy races, with clear implications for national security and economic competitiveness. The situation demands urgent attention from policymakers and stakeholders in the energy sector. The constraints on energy supply chains—exacerbated by high natural gas prices and delays in equipment supply—could hinder the growth of both AI capabilities and energy availability. As Canada and other nations seek to become leaders in AI, they are also reconsidering energy policy frameworks to support sustainable development. The interconnectedness of AI advancements and energy availability underlines the critical need for strategic planning in both sectors.