Consumers Are Footing the Bill for AI's Insatiable Appetite for Energy

As data centers place more and more demand on global power grids, policy and economic priorities are shifting from creating more clean energy to creating more energy, period. Projected clean energy additions are simply not enough to meet the runaway demand of the global tech sector, meaning that climate goals could be at risk. 

The proliferation of artificial intelligence is causing massive increases in energy demand from data centers, and the areas that host them are struggling to keep up. A 2024 study from scientists at Cornell University found that generative AI systems like ChatGPT use up to 33 times more energy than computers running task-specific software. As a result, it is estimated that each AI-powered internet query consumes about ten times more energy than traditional internet searches. But these numbers are just our best guess – we don’t really know how much energy AI is sucking up, because the companies who are piloting AI platforms aren’t sharing those numbers. 

But we know that the overall picture is pretty grim. Last year, Google stated that the company’s carbon emissions had skyrocketed by a whopping 48 percent over the last five years. “AI-powered services involve considerably more computer power — and so electricity — than standard online activity, prompting a series of warnings about the technology’s environmental impact,” the BBC reported last summer. While Google hasn’t publicly revised its goal of becoming carbon neutral by 2030, the tech firm has admitted that “as we further integrate AI into our products, reducing emissions may be challenging.” 

Already, the uptick in energy demand from data centers is causing new plans for gas- and coal-powered plants as well as extending the life of existing fossil fuel operations across the United States. Utility Drive reports that “at least 17 fossil fuel generators originally scheduled for closure [are] now delaying retirement” due to data center demand, and that “utilities in Virginia, Georgia, North Carolina and South Carolina have proposed building 20,000 MW of new gas power plants by 2040” for the same reasons. 

The issue is particularly acute in the Southeast. Major utilities in Virginia, North Carolina, South Carolina and Georgia project that they will collectively add 32,600 MW of electrical load over the next 15 years. The Institute for Energy Economics and Financial Analysis reports that in Virginia, South Carolina and Georgia, “data centers are responsible for 65% to more than 85% of projected load growth.”

However, it could be the case that this projected demand growth is overblown, and that states will add extra gas power capacity – and therefore extra greenhouse gas emissions – unnecessarily. Because the competition for energy sources is so fierce between data centers, the project managers of new centers are likely to reach out to many different power providers at once with speculative connection requests, creating redundancies and a compounding issue of “phantom data centers.” This inflates demand and makes accurate projecting extremely difficult. 

A study published last year by Lawerence Berkley National Lab calculated exactly how big the phantom data center issue might be, and they found that projected energy demand could be as much as 255 terawatt-hours of energy higher than real energy demand. That’s enough energy to provide power to more than 24 million households.

However, it’s not in utilities’ interest to simplify interconnection processes and ferret out phantom data centers. In fact, the panic over rising energy needs from data centers is giving them great leverage to expand their businesses and push through huge fossil-fuel powered energy projects. Plus, while building new plants and extending the lives of old plants is costly, those costs will be borne by the ratepayers. 

Consumers across the U.S. – and especially in the data-center-laden Southeast – can expect their energy bills to rise in response. “We are witnessing a massive transfer of wealth from residential utility customers to large corporations—data centers and large utilities and their corporate parents, which profit from building additional energy infrastructure,” Maryland People’s Counsel David Lapp recently told Business Insider. “Utility regulation is failing to protect residential customers, contributing to an energy affordability crisis.”

By Haley Zaremba for Oilprice.com

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