President Trump is Right: Data Centers Should Pay Their Own Way

It’s no secret the rapid buildout of AI data centers is going to, and in some cases already has, increase electricity and energy demands nationwide. Fortunately, President Trump’s statement, along with Microsoft’s announcement, presents a wise solution to address this rise in demand. Microsoft announced an initiative to curb its resource consumption and shield consumers from increased electricity costs while President Trump praised the company’s decision and emphasized that data center companies should pay their own way. 

Up until now, some decisions made by both data center developers and electrical utilities resulted in ratepayers bearing the costs of increased demand, both projected and actual. Unsurprisingly, polling shows Americans increasingly blaming data centers for increased electricity costs, underpinning why hostility towards the development of data centers have resonated across political and socioeconomic backgrounds.  

If AI development is to continue and outpace geopolitical competitors, it is fair to expect AI and tech companies to take greater responsibility for meeting their energy needs. Key companies, such as Microsoft, OpenAI, Google, and others, by no means are hurting for capital or income, are, in some cases, advocating for the development of their own energy generating facilities. Expecting data center developers to pay for the energy they consume and the infrastructure needed to connect to the electrical grid is a practical and appropriate approach. 

This, though a good solution, is only a step in the right direction. To further empower technological innovation, lawmakers must adopt new strategies to address growing energy demands; and a strong pathway is embracing behind-the-meter, co-location generation, and Consumer Regulated Electric Utility (CRE) policies. Sen. Cotton recently introduced new legislation, the DATA Act, to allow for the creation of new, islanded energy providers to serve new customers, like data centers, to ensure ratepayers are not burdened with extra costs while still promoting technological innovations.  

Simply put, these policies empower an AI data center developer to build their own electricity generation on the same site as the data center itself; so if a data center operator wants energy generation from natural gas, or solar, or a combination of both, it’s their choice and they are responsible for its construction and maintenance. There are also microgrids, which allow tech companies to purchase and create energy infrastructure that connects directly to an energy producer without connecting to the grid. Both of these options have the potential to vastly reduce the strain on the current grid.  

It would be foolish to block or halt technological innovation because of prohibitive energy costs that can be solved by having the government fix supply constraints. Microsoft’s decision to pay for the energy infrastructure and development should be replicated by tech companies, but this alone won’t address energy demands and strain on the grid. These problems require creativity, and lawmakers should embrace these creative policy solutions to better address energy demands and enable AI to flourish.  

James Morrone is an Energy Policy Analyst at Americans for Prosperity.