Due to the proliferation of data centers fueled by increased demand for artificial intelligence (AI), electricity rates have risen by up to 15% in some states.
According to CNBC on the 16th, Virginia, home to the largest number of data centers in the U.S. with 666, saw its electricity rates rise by 13% as of August compared to the same period last year.
During the same period, Illinois, home to 244 data centers, saw its electricity rates rise by 15.8%, while Ohio, home to 193 data centers, saw a 12% increase. This figure is two to three times the annual rate of increase in electricity rates across the United States, which is 5.1%. This is a direct contradiction to President Donald Trump’s pledge to halve electricity rates in his first year in office.
Amazon, Google, Microsoft, and Meta are currently operating large-scale data centers in these areas. Meta plans to build a 1GW (gigawatt) data center, “Prometheus,” in Ohio, and OpenAI, along with Oracle and SoftBank, will build an additional data center in Ohio as part of its “Stargate” initiative.
Google, Microsoft, and Cloud have also announced plans to expand data centers in these areas. Training or running AI models with hundreds of billions of parameters require massive matrix calculations, which inevitably require large amounts of power.
Recently, some large-scale data centers have been announced as gigawatt-scale, with 1GW being equivalent to the power generated by one nuclear power plant or the electricity consumed by approximately one million households simultaneously. Ultimately, as data centers increase, energy demand skyrockets, leading to higher electricity rates.
Virginia Governor-elect Abigail Spanberger, who won the November 4 local elections, has blamed recent electricity rate hikes on data centers and pledged to “make big tech companies pay their share.” Democratic senators, including Senator Bernie Sanders (Independent, Vermont) and Richard Blumenthal (Connecticut), sent a letter to the White House on the 10th, questioning the impact of data centers on electricity rates. Some analysts say this rising electricity rates are fueling a backlash against big tech companies, dubbed “techrash.”
Abraham Silverman, a researcher at Johns Hopkins University, noted, “There’s a growing sentiment, especially in areas with high concentrations of data centers, that people no longer want data centers,” and that “techrash is real.” However, there are also states where electricity rates have remained relatively stable. Texas, with 409 data centers, saw a mere 3.8% annual electricity rate increase, while California, with 321 data centers, saw a mere 1.2% increase.
Texas’ relatively short three-year lead time for connecting new power sources to the grid, providing a stable supply, and California’s shift to sharing wildfire prevention costs, previously charged alongside electricity rates, from general revenue, are believed to have helped stabilize the rate of increase.