AI growth strains electrical grid as tech companies expand operations

AMZNKey PointsElectricity prices have risen 10–13% since 2022 due to higher demand and costs.Data centers’ increased energy has already strained grids and raised nearby residential electricity bills.Tech firms are exploring nuclear power, foreign investments, and even orbital data centers as solutions.If you’re worried about electricity prices, Chris Wright wants you to hold on. “We’re doing everything we can to stop that rise in electricity prices that was driven by Biden policies, and yes, there’s inertia that continues on,” the Energy Secretary told Fox News. “But very soon, you’ll see a stop of the rise of electricity prices,” he added. “And with the continuation of Trump policies of energy addition, you will see declines in electricity prices later this term.” People have been jolted by their electric bills lately, as national averages have climbed roughly 10% to 13% from 2022 to 2025 due to factors like extreme weather, higher fuel costs, and increased demand from data centers. In fact, on December 16, three Democratic senators announced that they were investigating whether the operations of technology companies are contributing to increased residential electricity bills, according to The New York Times. In a letter sent to Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), Meta Platforms (META), and three other companies, the lawmakers said that the energy needs of data centers used for AI were forcing utilities to spend billions of dollars to upgrade the power grid. Tech companies like Amazon are looking for ways to power their data centers. — Source: Photo by Marques Thomas on Unsplash Senators concerned about power drain The senators said they were writing “in light of alarming reports that tech companies are passing on the cost of building and operating their data centers to ordinary Americans as AI data centers energy usage has caused residential electricity bills to skyrocket and nearby communities.” Data centers proliferating across the US will require 22% more grid power by the end of 2025 than they did one year earlier and will need nearly three times as much in 2030, according to 451 Research, a part of S&P Global. More on tech and stocks: Investors hope good news from Nvidia gives the rally more life Palantir CEO Karp just settled major debate Spotify just solved a major problem for listeners Amazon lawsuit could be a warning to other employers “In 2026, AI’s surging power demand growth will be testing grid limits, revenue models and sustainability goals,” Eduard Sala de Vedruna, Vice President and Head of Research, Horizons, S&P Global Energy, said in a statement. “The pace of progress will depend on unlocking new capacity and flexibility, with grid modernization a key constraint on energy security and competitiveness.” Countries that can’t handle growing demands for power may lose out on major investments. An analysis from Bloomberg Economics finds that almost all members of the Group of 20—an intergovernmental forum comprising 19 sovereign countries, the European Union, and the African Union—are seeing a rise in grid stress over the last few years. Issues include supply not keeping up with demand, volatile price swings, damages from climate impacts, and losses in transmission. Big tech companies have been warning that, if a country’s grid is not ready, they will have to redirect investments to countries where they are already established, Bloomberg reported. The lack of access to power was one of the reasons why Google cancelled plans for a data center near Berlin earlier this year. A Frankfurt data center is also unable to expand because local utilities could not provide sufficient power until 2033. Tech companies looking for alternatives to power data centers Even in Silicon Valley, Bloomberg said, data centers cannot start operating because the local utility in Santa Clara is not able to provide enough power. A data center that Digital Reality Trust Inc. applied to build in 2019 may continue sitting empty for years. Electricity shortages have prompted Microsoft to shift its data center investments away from Ireland and the UK toward the Nordics. View post: AI agents will radically change shoppingEconomyAI agents will radically change shoppingAnalysts say that agentic ai represents a seismic shift in the marketplace.Rob Lenihan 0 AMZN “Lower investment means lower economic growth in the long run,” said Maeva Cousin, chief trade and climate economist at Bloomberg Economics. “Countries that fail to meet rising electricity demand risk missing out on defining investments that will shape economic prospects for decades.” Many companies are heavily investing in nuclear energy to power data centers and AI, and the Energy Department is looking to build nuclear-powered artificial intelligence data centers on federal land using new public-private partnerships, Roll Call reported.

The Trump Administration has dramatically reduced the power of the Nuclear Regulatory Commission in the name of “national- and economic-security interest,” which the Carnegie Endowment for International Peace warned “could prevent host communities from getting information about and remediation for environmental and health risks of nuclear reactor sites close to their homes.” Things could be looking up for data centers—literally. Entire data centers could soon be launched into orbit, thanks to SpaceX CEO Elon Musk, Amazon Founder and Blue Origin CEO Jeff Bezos, and OpenAI CEO Sam Altman. Deutsche Bank analysts believe that while there are clearly technical challenges to making this a viable endeavor, “these seem to be engineering constraints as opposed to physics.” “Moreover, we are encouraged by the fact that Google, OpenAI, and Blue Origin are all seemingly exploring ways to do this,” the firm said in a recent research note. Deutsche noted there are several challenges to overcome before launching data centers into space, including the cost of rocket launches and the impact of radiation on chips, which could cause them to degrade faster. In addition, the firm said, “maintenance appears very impractical in space.” View post: Like it or not, AI use is expanding, in business and lifeTechnologyLike it or not, AI use is expanding, in business and lifeAI adoption has accelerated at an unprecedented rate,Rob Lenihan 0 LOGO About the authorsRob LenihanSenior ReporterRob Lenihan has nearly 40 years of journalism experience, seven of which have been at TheStreet.com, covering stocks, company news, and economic trends. His typical day starts with reviewing stock analysts’ reports for story ideas. While he has plenty of experience with breaking news, he is currently focusing on trending news stories.Jeremy SalvucciJeremy is a writer and editor who focuses on longer-form, informational articles that explore the fields of consumer finance, employment, economics, cars, and culture.Start the Conversation