WASHINGTON (TNND) — Facing voter backlash over rising prices for electricity, President Donald Trump announced his administration is working with tech companies to sign pledges to pay a greater portion of the energy costs that come with data centers.
Trump did not provide more details on how the pledges would work or what companies had signed onto them but said they should foot the costly bills that will come with remaking the grid and producing enough energy to power them.
“We’re telling the major tech companies that they have the obligation to provide for their own power needs,” he said. “They can build their own power plants as part of their factory, so that no one’s prices will go up, and in many cases prices of electricity will go down for the community, and very substantially down. This is a unique strategy never used in this country before.”
Tech companies have invested hundreds of billions to build data centers to power their AI models that require enormous electricity and sometimes water. The rapid expansion has been met with backlash from voters and elected officials over concerns about rising utility bills and job losses.
How to meet the growing demand for electricity with the expansion of data centers is one of the major questions facing the AI industry. Data centers will account for up to 21% of overall global energy demand by 2030, according to researchers at the Massachusetts Institute of Technology.
The federal government and several states have already taken steps to increase generation and have tech giants absorb the costs. Under a plan outlined by the Energy Department, electrical grid operator PJM would hold an emergency power auction for tech companies to bid on 15-year contracts for electricity from newly built power plants. Long-term contracts would help finance new plants without spreading costs across residential ratepayers.
Utility bills have been a sore spot for consumers, with electricity prices climbing 6.7% nationwide last year following years of elevated inflation, according to federal data. How much of that can be attributed to data centers is disputed by tech firms, utility companies and administration officials, but major AI developers are still signing onto pledges to avoid more backlash.
Creating more electricity also isn’t the end of the story. New transmission lines, power plants and substations are often required before new power can be connected to a grid that is already under strain.
Higher costs for electricity or upgrades to the grid are typically spread across the entire pool of customers in a region, meaning consumers can sometimes end up subsidizing large industrial users. With hundreds of new data centers planned nationwide, tensions are rising between an industry that its supporters say will transform the U.S. economy and consumers worn down by years of inflation.
Tensions are already playing at the local and state. In Florida, state House lawmakers advanced legislation putting new restrictions on large-scale data centers. Illinois Gov. JB Pritzker proposed a two-year pause on state tax incentives for new data centers as lawmakers weigh the impact on energy demand and utility costs.
Some lawmakers want to see more than pledges to guarantee consumers won’t face higher costs.
“A handshake agreement with Big Tech over data center costs isn’t good enough. Americans need a guarantee that energy prices won’t soar and communities have a say,” Sen. Mark Kelly, D-Ariz., wrote on X.
How to deal with data centers is becoming an increasingly prominent political issue that cuts across partisan lines and age groups with coalitions of lawmakers on both sides of the aisle taking a second look at whether to support building them in their communities. Some states are pulling back tax incentives for tech companies to build them, implementing zoning restrictions or mandating electricity agreements to keep costs from being passed onto consumers.
Trump said his strategy would secure electricity for AI companies while lowering prices for surrounding communities.
“You are going to see good things happen over the next number of years,” Trump said.
Some AI developers, like Microsoft and Anthropic, have already rolled out their own initiatives seeking to soothe resistance to building data centers with promises to pay their share of added electric costs or create their own power plants.
Microsoft rolled out a multi-point plan last month promising to pay its way to ensure its data centers don’t increase electric bills and that the company would ask utilities and public commissions to set their rates high enough to cover their needs and add supply to the grid.
Anthropic, the developer of Claude, announced earlier this month it will cover increases in consumer utility rates as a result of its data centers. It also promised to pay for infrastructure upgrades to connect data centers to the grid and investing in the communities they will be based in.
“The country needs to build new data centers quickly to maintain its competitiveness on AI and national security—but AI companies shouldn’t leave American ratepayers to pick up the tab,” the company wrote in a release.
The Trump administration has held AI expansion up as essential to the economy’s future and national security, even as regulators and lawmakers weigh how to meet growing demand for power without driving up costs for consumers.
