A surge in data center construction, driven by major technology companies, is meeting growing resistance from lawmakers at both the state and federal level. The primary concern is the immense strain these facilities are placing on the nation’s power grid, leading to higher electricity bills for consumers.
This week, a bipartisan group of U.S. senators introduced the first federal bill designed to shield consumers from bearing the cost of the energy consumed by data centers. This federal action follows moves by several states. Most recently, New York became at least the sixth state where legislators have proposed a temporary halt on new data center construction. If passed, the bill would effectively close the state to new projects.
These legislative efforts are a direct response to an unprecedented boom in data center development, fueled by massive investments in artificial intelligence. Four of the largest tech firms are on track to spend over $650 billion on AI this year alone. A significant portion of this investment flows into building the data centers that require immense amounts of electricity and water.
The impact on the power grid is substantial. According to estimates from a national laboratory, power demand from U.S. data centers doubled between 2018 and 2024 and could triple by 2028. In the country’s largest grid region, the price utilities pay for electricity capacity has skyrocketed, rising more than tenfold for the upcoming period. These increased costs are often passed on to local residents and businesses.
Beyond energy, the environmental footprint is also significant. The largest data centers are forecast to use over 150 billion gallons of water for cooling between 2025 and 2033, equivalent to the annual usage of millions of households.
In response, some AI companies have pledged to mitigate their impact. Several have announced policies to cover the full cost of their energy use and associated grid upgrades, promising that consumers will not have to foot the bill. Others have committed to reducing water consumption or replenishing more water than they use.
Despite these promises, lawmakers are pushing for formal regulations. Proposed legislation in states like Georgia and Virginia would pause new data center construction for several years, allowing legislation to catch up with the industry’s rapid growth. One state senator, commenting on her proposed bill, described the facilities as “energy-guzzling” and cited their negative impacts on utility prices, the environment, and local communities.
Industry experts note that the current regulatory framework was not designed for such a sudden and massive increase in demand from a single sector. As one site selection advisor explained, “The system is ill-equipped to address the dramatic increase in demand created by AI data centers,” leaving policymakers to adjust in real time.
