Amid tech companies' ambitious plans for expansive new data centers, a recent survey indicates that consumers are growing increasingly apprehensive. Their concern centers around the potential for AI-fueled growth to lead to higher electricity bills.
The survey, conducted by solar installer Sunrun, reveals that 80% of respondents fear that data centers will negatively impact their utility costs.
For over ten years, electricity demand in the U.S. remained relatively stable, according to the U.S. Energy Information Administration (EIA). However, in the past five years, commercial entities, including data centers, along with industrial users, have significantly increased their consumption. Their use grew by 2.6% and 2.1% annually, while residential consumption only increased by 0.7% per year.
Currently, data centers account for approximately 4% of the nation's electricity consumption, which is more than twice their share five years ago. Projections from Lawrence Berkeley National Laboratory suggest that by 2028, this figure could surge to between 6.7% and 12%.
Fortunately, the demand has so far been matched by a boom in new power sources, primarily from solar, wind, and advanced battery storage solutions. In particular, large tech companies have made extensive investments in utility-scale solar energy, drawn by its cost-effectiveness, flexibility, and quick deployment timeline. Notably, solar farms can begin supplying energy prior to full completion, with most projects reaching completion within 18 months.
The EIA anticipates that renewable energy sources will continue to dominate new capacity additions at least until next year. This trajectory might have stretched beyond 2026, but experts forecast that potential political changes, such as a Republican rollback of key elements of the Inflation Reduction Act, could impede the growth of renewables.
Additionally, natural gas, another favored power source for data centers, has faced challenges. While production has increased, much of the supply is diverted to exports rather than domestic use. Between 2019 and 2024, domestic consumption for electricity generation rose by 20%, whereas export consumption saw a dramatic 140% increase.
Adding to these challenges, new natural gas plants, which typically take around four years to build according to the International Energy Agency, are not expected to come online soon enough. Compounding these issues are delays in turbine production, with manufacturers facing up to seven-year wait times for delivery, despite recent expansions in manufacturing capacity.
This situation has left data center developers in a tough spot, with both renewable and natural gas developments under pressure.
AI and data centers aren't solely to blame for the surge in electricity demand, as industrial users also significantly contribute. However, AI often captures more public attention.