The AI revolution is likely to drive up your electricity bill. Here's why.
New Jersey residents got some bad news earlier this year when the state's public utilities board warned that their electricity bills could surge up to 20% starting on June 1. A key driver in that rate hike: data centers.
The spread of these large-scale computing facilities across the U.S. amid growing demand for artificial intelligence, data storage and other technology services is projected to increase electricity consumption to record highs in the coming years, according to experts.
A report from Schneider Electric, a company that specializes in digital automation and energy management, projects that electricity demand will increase 16% by 2029, mainly due to the proliferation of data centers. Most data centers rely on the nation's electrical grid for energy, meaning it will be Americans ratepayers who pick up the tab, Mark Wolfe, executive director of the National Energy Assistance Directors Association, a group that represents states on energy issues.
"As utilities race to meet skyrocketing demand from AI and cloud computing, they're building new infrastructure and raising rates, often without transparency or public input," he told CBS MoneyWatch in an email. "That means higher electricity bills for everyday households, while tech companies benefit from sweetheart deals behind closed doors."
More data centers, more power
Thousands of data centers now dot the country, with the largest concentrations in Virginia, California and Texas. The number of data centers in the U.S. nearly doubled between 2021 and 2024, according to a report from Environment America, a network of environmental groups.
It's not just the number of data centers that are expected to rise, but the size. "The trend has been bigger data centers," Dave Turk, the former deputy secretary of the U.S. Department of Energy, told CBS MoneyWatch. "They tend to be more energy efficient."
Spurring that expansion is the rapid growth of "generative" AI companies that are consuming vast amounts of electricity to train so-called Large Language Models like ChatGPT and power. AI searches use 10 times more electricity than normal internet searches, according to a study from the Electric Power Research Institute, a nonprofit organization.
"AI is an increasing part of data centers and certainly responsible for increased electricity demand," Turk said.
Data centers, which contain thousands of computer servers, networking gear and other infrastructure, also require power to cool their systems and keep them from overheating.
Torsten Sløk, chief economist at asset management firm Apollo Global Management, estimates that data centers will require an additional 18 gigawatts of power capacity by 2030. To put that into context, New York City power demand is about 6 gigawatts.
About 4.4% of U.S. electricity went to power data centers in 2023, according to a Department of Energy's Lawrence Berkeley National Laboratory study. Not all of that demand is related to AI, but it represents a portion, Turk said.
Other factors pushing up prices
The spread of data centers isn't the only reason U.S. electricity prices are surging. The price of natural gas, inflation, ongoing electrification of buildings and vehicles, and other factors also play an important role. But utilities are factoring the high demand from data centers into their pricing models.
For example, when Dominion Energy, one of the Virginia's largest utilities, in April proposed a price hike of $8.51 per month in 2026, the company also floated the idea of a "new rate class for high energy users, including data centers."
Electricity prices have risen 4.5% in the last year, according to recent data from the Labor Department, and are estimated to surge this summer. Energy costs also drift higher if a Republican-backed budget package, dubbed the "big beautiful bill," is passed and signed into law by President Trump. Analysts from Rhodium Group predict that the bill, which would repeal a slate of tax credits created under the Inflation Reduction Act, could increase a family's energy expenditures by nearly $400 a year.
Beyond price increases, the heightened energy demand from data centers could also compromise the reliability of the grid, according to experts. In a recent report, the North American Electric Reliability Corp said that facilities that service AI and cryptocurrency companies are being developed at a faster pace than the power plants and transmission lines to support them, "resulting in lower system stability.
PJM, a grid operator in 13 states plus Washington, D.C., cited data center demand as one of the factors that could lead to capacity shortages in its 2025 forecast.
Harry Chapin: Songwriter, activist and father
How the U.S. Army was born
Early details on arrest in Minnesota lawmaker shootings
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Post
22 minutes ago
- New York Post
Here are Gen-Z's unbelievable job requirements, including nap rooms and sabbatical leave: survey
They're Gen-ZZZ. Nearly one in six Americans under the age of 28 won't even consider taking a job unless there's a designated snooze space at the office, a mind-boggling new survey found. 'It's clear Gen-Z isn't shy about voicing what they want from today's workplace, and for many, it goes beyond salary and health insurance,' said Amanda Augustine, a certified professional career coach and resident expert for the resume-building website which polled 1,000 professionals across the country about their must-have perks while evaluating job opportunities. For them, napping on the clock, and other demands 'aren't just nice-to-have extras; they reflect a shifting view around work-life balance and overall well-being,' Augustine added. 3 Nearly one in six Americans aged up to 28 won't even consider taking a job unless there's a designated snooze space at the office, new survey found. Jack Forbes / NY Post Design One in five Gen-Zers — more than any other generation — say a 'fun room,' complete with games like ping pong and other recreational activities, is essential to their work environment, the startling survey results reveal. And one in five wouldn't even consider a position if the company's offices are not pet-friendly, compared to 14% of millennials, aged 29 to 44; 8% of 40- to 65-year-old Gen-Xers and only 4% of Boomers, aged 61 to 79. More Gen-Zers — 33% — expect free snacks and lunches at the workplace, more than any of their older coworkers, the poll found. 3 Overall, paid overtime was revealed as the most in-demand employee perk in America, with 76% of professionals saying it's a must-have. And even if an office is up to snuff, they don't want to show up. A whopping one in three said a four-day workweek is non-negotiable, and one in four expect 'extended' sabbatical leaves 'for personal development or travel.' 3 Napping on the clock is just one of Gen-Zers many demands while evaluating job opportunities. Fxquadro – Younger generations are 'pushing back against the old model of constant hustle and burnout' by valuing flexibility and 'a more enjoyable day-to-day experience,' according to Augustine. 'Companies that dismiss these priorities as frivolous may find it increasingly difficult to attract and retain top talent from this up-and-coming generation of workers,' she warned.
Miami Herald
an hour ago
- Miami Herald
Analysts revamp IBM stock price target after AI-fueled new high
For investors looking beyond popular AI software names like Palantir, International Business Machines Corp. (IBM) is quietly becoming a stock to watch. On June 18, IBM stock closed at a record $283.21. Year-to-date, the stock is up more than 27%. Don't miss the move: Subscribe to TheStreet's free daily newsletter The 114-year-old company, once best known for mainframes and hardware, has spent the past few years transforming itself into a modern software and consulting business. It has focused on strategic acquisitions, exited low-growth and high-cost units, and rebalanced its business toward artificial intelligence, hybrid cloud, and enterprise automation. Today, IBM sells software tools that help businesses build and manage AI systems, including WatsonX, its platform for creating and training AI models. It also owns Red Hat, the open-source software giant it acquired in 2019, which plays a key role in its hybrid cloud strategy. Many of IBM's clients are large enterprises and government agencies looking to streamline operations through AI and cloud technology. Image source: Bloomberg/Getty Images IBM stock fell 6.6% on April 24 after its first-quarter earnings report but quickly recovered in the weeks that followed. IBM reported revenue of $14.5 billion for the first quarter, up 1% from the prior year and slightly above analyst expectations. Adjusted earnings per share came in at $1.60, down 5% year over year. Related: Analysts unveil bold forecast for Alphabet stock despite ChatGPT threat The tech giant warned of an "uncertain" operating environment, but reaffirmed its full-year outlook for 5% revenue growth and $13.5 billion in free cash flow, key for both dividends and possible future acquisitions. "While no one is immune to uncertainty, we enter this environment from a position of relative strength and resiliency," IBM CEO Arvind Krishna said during the April earnings call. "Our clients run the world's most essential processes. Our diversity across businesses, geographies, industries, and large enterprise clients position us well to navigate the current climate." Bank of America analyst Wamsi Mohan has raised his price target for IBM to $320 from $290, reiterating a buy rating on the shares, according to a research note on June 18. Despite trading at all-time highs, Mohan believes that IBM "remains interesting due to the transformational initiatives undertaken by management, positioning for growth in Gen AI, Agentic AI (and eventually quantum), and strong FCF driven by internal productivity initiatives." Related: Analyst unveils surprising Nvidia stock price target after nearing record high The analyst continues to view IBM as "a defensive investment" with improving revenue growth. That growth could lead to more cash flow that could be reinvested in more mergers and acquisitions (M&A). Meanwhile, BofA sees the potential for IBM's revenues to accelerate. "In our opinion, the Mainframe has increased in relevance and drives everything from AI, increased software attach and higher quality MIPS on transaction processing, all of which support higher (accelerating) growth in the future," Mohan wrote. Wedbush is also bullish on IBM shares, raising its price target from $300 to $325 with an outperform rating. More Tech Stocks: Amazon tries to make AI great again (or maybe for the first time)Veteran portfolio manager raises eyebrows with latest Meta Platforms moveGoogle plans major AI shift after Meta's surprising $14 billion move IBM remains "one of our top software names to own as the AI Revolution accelerates over the coming years," Wedbush analyst Daniel Ives wrote in a research report published on June 20. "While the stock has had a great run so far in 2025, we believe IBM is still under owned and in the early stages of a renaissance of growth with AI the key driver." The average price target on IBM shares from 14 analysts tracked by TipRanks is $267.54. Related: Top analyst sends bold message on S&P 500 The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Miami Herald
an hour ago
- Miami Herald
Home Depot store closing indefinitely after scary incident
Retailers have been fighting an uphill battle over the past several years. Five years ago, Covid hit nearly every retailer hard. Related: Huge retail chain suddenly closing 100s of stores, no bankruptcy The beginning of 2020 brought a series of challenges for which most retailers weren't prepared. Even the oldest or most robust brands weren't anticipating a pandemic that would bring brick-and-mortar commerce to a near-screeching halt. For at least a few weeks, almost every retailer had to scramble to figure out how to stay afloat. Some were better equipped than others. Most every brick-and-mortar retailer was forced to shut down for at least some period of time, while customers stayed away and foot traffic went to zero. This put a lot of strain on e-commerce companies, which suddenly saw a spike in demand for inventory and had to coordinate logistics and shipments across the U.S. as efficiently and quickly as possible. And once the world reopened, many retailers experienced something of a jolt when they had to quickly adapt to a completely changed world. Interest rates rose sharply, making debt, growth, and recovery more expensive. And customer behavior had been changed forever. But some retailers were spared more than others. During Covid, many of us increased our time spent at home or around the house. That meant that many of us looked around and saw the projects we'd been putting off because of a busy schedule. Or maybe we just started to notice things that needed to be done. More closings: Popular local Dairy Queen rival suddenly closing, no bankruptcyAnother big Mexican chain closing down restaurant, no bankruptcyUPS suddenly closing more stores amid chaotic new change, layoffsPopular fast-food burger chain closes all restaurants in key area So when things slowly began opening back up, many Americans were far more likely to go into an open and sprawling big-box retailer like Home Depot than they were to go inside a crowded bar or gym. That meant good business for home improvement retailers. Between 2020-2022, Home Depot brought in record revenue. It added $40 billion in sales (a growth rate that had taken it nine years to achieve previously). And the company continues to fly high; it made its largest-ever acquisition in 2024, buying SRS Distribution for over $18 billion. No matter how high-flying a retailer might be, however, there is always a chance that an unforeseen event can close things down again. Such is the case with a Home Depot store located in Topsham, Maine. Related: Huge troubled retailer closing dozens of stores, laying off 100s The store, which is located near other big-box stores approximately 15 minutes outside of Freeport, Maine, was closed on Monday after a fire broke out in the early morning. Firefighters responded to a call around 4:25 am. The blaze was confined mostly around the cash register section. Officials believe it was caused by a battery that overheated while a radio was in its charging station. Smoke and water left much of the store damaged, and it will be closed until further notice. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
