News : When Big Data Comes to Small Town: Data Center Blog Series Part 2
By Kenny Bruno
This blog is based substantially on research in a Sept. 29, 2025 unpublished paper by Peter Montague
Part I: Fabrications, Hallucinations, Scheming and Untruthfulness
Part II: The Hype in HyperScale
Part III: BYONCE is Possible
Introduction
Way back when, about a year ago, we almost never heard a peep about data centers. Now every day its data center this, data center that. To some they are a bogeyman to be opposed outright, to others an inevitable nuisance, to others a hopeful development, and to still others they’re OK as long as they’re powered by clean energy rather than polluting methane gas.
To the oil and gas industry, they are a pretext to build even more methane burning power plants, because, after all, that is what AI demands, and we can’t possibly deny AI what it “demands.” And we couldn’t possibly meet that “demand” with “alternative” energy like solar and wind. Or could we?
- In this 3-part blog, we look at the hype in hyperscale data centers. In Part I, we look at Generative AI itself, which is what the new giant data centers are serving. In Part II we look at the numbers behind energy needs for new data centers, and why they will raise electricity bills. In Part III we look at some of the real world impacts of data centers, especially around noise, water use, jobs and pollution, and whether those impacts can be avoided.
Part II The Hype in Hyper-Scale
In Part I of this series, we saw that Generative AI has some very serious inherent flaws, including fabrications, scheming and untruthfulness. In other words you can’t trust it because it lies to you. Meanwhile, industry wants you to believe that we must go full speed ahead because of the wonders it will bring, and because, China.
Hyperscale are being built mainly to run artificial intelligence (AI) software, but the future of AI is unknown. Is it a bubble? Is it a world-changing technology on a scale never previously seen? Something in between? No one can be sure.
Even if the hype is justified, the electricity use may not be that dramatically high. Data centers will undoubtedly become more efficient (performing more calculations using less energy) as time goes on, so future individual data centers may use much less energy than is required today. This implies that some power plants being built today may not be needed.
There’s a hidden cost to all this hype. Well actually, it’s not so hidden — you’ll find it in your electric bill. Whether projects succeed or fail, ratepayers will be forced to pay more for their electricity as utilities and boards of public utilities rubber-stamp subjective, complex and obscure rate-making procedures that ultimately shift electricity costs from data center owners onto the general public.
Investor-owned public utilities are highly regulated. The way they earn more profit is by installing more equipment. Thus, they have a financial incentive to expand their physical part of the power-distribution system (aka the grid), such as new power lines and substations and/or the number of power plants within their jurisdiction. In some cases, they will even invoke eminent domain to take private property for new infrastructure. For their part, state boards of public utilities, which regulate investor-owned utilities but sometimes act as an extension of the utility, are political bodies that may have political reasons for rubber-stamping a “gee whiz” data center proposal. Even states with public power are not always acting in the public interest.
If genAI does not meet the hype, promised AI data centers will not be built or will shut down after being built. Investors will take a bath, projected local jobs and tax revenues will not materialize, utilities are likely to increase rates for all their customers to recoup any failed investments, thus raising electricity costs for everyone unfairly (especially hurting people with low income). And, in some cases built-for-purpose fossil-fueled power sources will continue pouring greenhouse gases into the atmosphere.
From the hype about the coming demand for additional electricity, you’d think the US needs hundreds or thousands of new power plants. But let’s look at the numbers.
The 2024 United States Data Center Energy Usage Report study by the Lawrence Berkeley National Laboratory (LBNL) concluded that U.S. data centers consumed 176 Terawatt Hours (TwH) in 2023, representing 4.4 percent of total U.S. electricity consumption.
The LBNL study projects U.S. data center growth of 149-404 TwH, for a total of 325-580 TWh, representing somewhere between 6.7 percent and 12.0 percent of total U.S. electricity use in 2028.
These numbers imply the need for 30 to 80 new power plants of approximate 0.9 gigawatts apiece. That’s not nothing, but neither is it a wild expansion of the US electric grid. There are already over 12,000 power plants in the US.
Data centers are not even the fastest growing source of demand. Space heating demand will grow twice as much; air conditioning will grow three times as much, demand by electric vehicles 3.25 times as much.
Granted, data centers tend to cluster in particular locations, so the burden on VA, CA and TX will be high. But even there, why should ratepayers subsidize additional electricity use?
What’s especially frustrating is that the companies building hyper-scale data centers are the richest in the world, yet their hands are out.
Public subsidies
Thirty-six states currently use tax dollars to subsidize data centers being built by and for the wealthiest corporations on the planet — Apple, Alphabet/Google, Amazon, Meta/Facebook, Microsoft, Nvidia, and Tesla — all of which can easily afford to pay for their own infrastructure expansion.
Local communities should not be asked to offer tax incentives to data center owners on the promise of local jobs and local tax revenues. Data center owners should pay for all the costs their proposals entail.
There is abundant evidence that federal and state regulatory bodies routinely approve legal agreements that shift electricity costs created by new data centers onto residential customers. This is highway robbery endorsed by governments and should be called out and forbidden. Data centers could easily pay all of their own costs with not one dime of public subsidy.
They can afford to pay more for electricity. But it’s everyone else who gets stuck with the electric bill.