Data Centers Can’t Compete With Your Lights

Artificial intelligence (AI) companies promise that they are driving us into a new age, but their impact may not be what you think. AI data centers are pushing everyday Americans to the brink and contributing to the ongoing, extreme rise in the cost of living. According to recent polling, 63% of Americans report that utility bills are adding to their financial stress. For Americans earning under $50,000, that number jumps up to 76%. This financial stress can be largely attributed to the rising demand for energy across the country, especially for these large data centers. 

The New York Independent System Operator, which operates the New York energy markets and monitors the reliability of state power systems, estimates that large load additions, like data centers, will add nearly 2,500 additional megawatts (MW)  to the grid by 2035. The Pennsylvania-New Jersey-Maryland (PJM) Interconnection, the regional transmission organization for a collection of Mid-Atlantic states, similarly finds that 30 out of 32 gigawatts of projected load growth is attributable to data centers. These hyperscaler data centers are placing an increasingly large strain on our energy infrastructure. With electricity prices already increasing by 7% from June 2024 to June 2025, a remedy is necessary. 

Finding this remedy begs the question: Why can’t we just build more energy?

The answers to this question are complicated. First, global supply chain disruptions stemming from tariffs and the sudden increase in demand from data centers have increased lead times for new gas turbines out to 2030. Additionally, Congress’s revocation of several Inflation Reduction Act (IRA) subsidies, which aimed to help proliferate cleaner, quickly produced forms of renewable energy, has caused uncertainty. Utility-scale solar facilities, for example, can generally be built within 18 months. In comparison, combined cycle gas plants are currently projecting seven or eight years for completion. Recent analysis by Princeton University researchers finds that the One Big Beautiful Bill, which revoked the IRA subsidies, will ultimately raise energy costs to ratepayers up to $165 per household by 2030. These economic disruptions have reverberated around the energy industry, and there simply isn’t enough capacity to address the immediate needs of data centers. So what can we do?

To protect ratepayers in the short term, immediate action is needed by state legislatures or the federal government, although it is presently unlikely. The best way to protect ratepayers is to simply incentivize or require data centers to bring their own energy generation. By building and financing their own source of energy next to their data center, an energy generation strategy known as co-locating, companies will not have to compete with ratepayers for energy. Monitoring Analytics, the independent market watchdog for PJM, has advocated for this solution, arguing that it reduces reliability risks and ensures the continued operation of energy markets. Many state legislatures across the country have passed legislation to study the effects of data centers on their infrastructure, but stronger action is necessary to address the root problem.

Data center proliferation is occurring across the country as companies are attempting to get in on the massive industry, even on Cayuga Lake. The technology company TerraWulf, Inc., recently obtained a lease on the former Cayuga Power coal plant in Lansing, NY. The former coal plant was shut down in 2019, as it was no longer economically viable and had environmental concerns around its water use. The plan suggests gutting the former coal plant and using the infrastructure to create a data center, taking up 400 MW of energy with no directly co-located energy. The project, however, calls for a separate 800 MW battery storage facility and a 67 MW solar farm.  

While it is commendable for TerraWulf to use existing industrial infrastructure for its data center, the main issues surrounding data centers are still present. There is not enough energy to go around, as this data center’s energy consumption at max capacity is equal to powering 500,000 homes in NY. According to the most recent census data, there are only 48,519 homes in Tompkins County. This data center, at max capacity, will utilize ten times more energy than all of the residents of Tompkins County. 

Lansing public officials and state legislators need to collaborate to protect ratepayers while allowing economic development to flourish. These types of projects are huge sinks of energy, water, and waste, but they often create many jobs. A weighing of these potential upsides and downsides is paramount to the community, not only to revitalize job creation in upstate New York, but also to preserve the natural beauty that exists here.