Rising energy prices put AI and data centers in the crosshairs

As tech companies tout their plans for massive new data centers, consumers are increasingly concerned that the AI-powered gold rush will ultimately drive up the price they pay for electricity, a new study shows.

The reportcommissioned by solar installer Sunrun, found that 80% of consumers are concerned about the impact of data centers on their energy bills.

Consumer concerns are not unfounded.

Electricity demand in the United States has remained stable for more than a decade, according to to the US Energy Information Administration (EIA). Over the past five years, commercial users, including data centers and industrial users, have increasingly been drinking from the grid, with annual growth rates of 2.6% and 2.1% respectively. Meanwhile, residential use grew only 0.7% per year.

Data centers currently consume about 4% of the electricity generated in the United States, more than double their share in 2018. By 2028, consumption is expected to rise to 6.7% to 12%. according to at Lawrence Berkeley National Laboratory.

Generation has managed to meet demand thanks to a surge in new capacity from grid-scale solar, wind and battery storage. In particular, big tech companies have been making big deals for new utility-scale solar, attracted by the low cost, modularity and speed of the energy source. Solar farms can start supplying power to data centers before they are completed, and a new project typically takes about 18 months.

The EIA expects renewable energy sources to dominate new generation capacity for at least the next year. This trend would likely have continued beyond 2026, but experts predict that a Republican repeal of key parts of the Inflation Reduction Act would hinder the growth of renewable energy sources.

Meanwhile, natural gas, another energy source favored by data center operators, has not lived up to the moment. Production has increased, but most of the new inventory has gone towards production feed exports instead of on the domestic market. Electricity producers’ consumption increased by 20% between 2019 and 2024, while exporters consumed 140% more.

New natural gas plants will also not be ready in time, because they still exist four years completed according to the International Energy Agency. A backlog in the number of turbines used by gas-fired power plants has only exacerbated the problem. Manufacturers state delivery dates up to seven yearsand the newly announced production capacity Things are unlikely to change.

Slow natural gas production combined with limited renewable energy sources has left data center developers in dire straits.

While AI and data centers aren’t entirely responsible for the increasing demand for electricity—industrial users have been almost as thirsty—they have made headlines.

AI is likely to be the center of consumer ire: More people are concerned about the technology than are excited about it, according to one survey. Pew survey. No surprise considering that many employers use the tool as a way to reduce headcount rather than improve employee productivity.

Throw rising energy prices into the mix, and you can start to see how a backlash could occur.