In New Carlisle, Indiana, there is a section of farmland where server racks are grown instead of corn. As you pass it, you’ll notice the long, windowless structures that have taken over the American landscape. In this case, it’s Amazon, which is busy training artificial intelligence. Inside, a technician moves across the floor. Outside, the question that no one fully addressed prior to the concrete being poured is beginning to gain traction: where will all that power come from?
It’s difficult to ignore how quickly this occurred. Data centers were only mentioned in passing when it came to energy planning a few years ago. By 2028, the Lawrence Berkeley National Laboratory projects that their electricity consumption will have nearly doubled, and the grid these businesses wish to connect to is, to be honest, outdated. transmission lines that are getting older. long wait times for connections. decades of industrial expansion that, for the most part, failed. Thus, the tech behemoths stopped standing in line, as impatient, well-funded businesses often do.
I’m most interested in that part. This past August, Chad Zamarin, who oversees the pipeline operator Williams Companies, stated that the objective was to power facilities directly so they wouldn’t have to wait for multiyear grid expansions. This was more than just a workaround. He described how tech companies are turning into energy planners, buyers, and brokers, sourcing gigawatts in the same manner that they used to source cloud storage. Producers of natural gas took notice right away. The largest company in the nation, Expand Energy, has increased by over 24% in the last 12 months. EQT has increased by over 40%. It appears that the market does not think this is a passing trend.
This story has a hidden cost that isn’t shown on the balance sheet of a tech company. It rests on yours. The Construction Work In Progress incentive, which permits utilities to charge consumers for power plants and transmission lines before those projects exist, has been adopted by regulators in at least forty states. Less than twenty states permitted it ten years ago. Although the monthly fees appear modest—a few dollars—when multiplied over millions of households, they fund a massive expansion that may never directly benefit regular ratepayers. According to Paul Cicio of the Industrial Energy Consumers of America, “the average ratepayer has no idea this is happening,” Reuters reported. I was struck by that line. Infrastructure typically operates in this manner. You only become aware of it after a decision has been made.
Not everyone perceives an issue. According to CBRE’s analysis, the expansion of data centers has driven employment in electrical services to all-time highs, and localities like Loudoun County, Virginia, anticipate collecting nearly $795 million in data center equipment taxes this year alone. There are actual jobs and real money coming into actual towns. Reasonable people disagree about whether that trade is fair because the costs spread quietly and widely while the benefits land locally and unevenly, creating tension.
It is not just Americans who are at odds. Concerned about a high-voltage line they thought would cut through conservation land, locals like Patricio Hernandez attempted to halt an Amazon complex in the hills below the Andes outside of Santiago. They were defeated. Early in April, the authorities gave their approval. From a distance, it appears as though the same script is being read simultaneously in twelve different languages.
It’s still unclear if this will work out well. The optimistic scenario is that all of this private funding updates a grid that has been neglected for thirty years by public policy. The skeptical argument is that businesses keep the profits while the public pays for modernization. Both may be partially accurate. The distinction between a utility and a technology company has become increasingly hazy, almost without a vote. There was always a cloud. We now know precisely where it operates and who is responsible for funding it.
