APOA | Colin Allen
The rapid rise of artificial intelligence is reshaping the digital economy and the physical infrastructure that powers it. Data centers—especially those designed for AI workloads—are emerging as one of the fastest-growing sources of electricity demand, with significant implications for both infrastructure investment as well as consumer energy prices.
In the United States, data centers consumed roughly 183 terawatt-hours (TWh) of electricity in 2024—more than 4% of total national power demand. That figure is projected to rise dramatically as AI computing expands and new facilities come online. This surge is already reshaping electricity delivery systems. Data centers tend to cluster geographically around key metropolitan areas—such as Northern Virginia, just outside of Washington, DC—placing concentrated pressure on local transmission networks and generation capacity. In some states, utilities and grid operators are planning billions of dollars in new transmission and generation investments to accommodate projected demand growth.
The implications for electricity pricing are increasingly visible. As utilities build new infrastructure and procure additional generation, these system-wide costs can flow through to ratepayers via higher supply charges or capacity payments. During the State of the Union, President Trump announced the Ratepayer Protection Pledge, an initiative where data center operators would cover energy costs linked to their facilities – one way to help to mitigate pricing impacts on homeowners in nearby communities.
A recent Brookings Institute reports digs deeper into the connections between rising energy bills and data centers pointing to two primary drivers being: 1) data centers need lots of power to operate and this requires development of new power generation; and 2) data centers also need improved electricity and distribution infrastructure, such as high-voltage lines and substations. In both cases, costs are passed along to consumers resulting in rising residential energy bills at a time when affordability is top-of-mind for households across the country.
The AI revolution is not just a computing story—it’s an energy story which has real economic impacts for households. Ensuring reliable and affordable electricity in the AI era will require coordinated planning across utilities, regulators, and technology companies to align digital growth with the realities of grid capacity and infrastructure investment.