Behind the Curtain: America's energy jam
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Illustration: Aïda Amer/Axios
America faces an economy-shaping energy jam: We've never needed more of it more urgently to meet rising consumer and business demand.
Why it matters: We produce and export more energy than at any point in history. But the data centers powering the AI boom suck up so much energy, so fast, it's increasingly jacking up prices for nearby ordinary residents.
The big picture: This dynamic — surging demand and finite supply — is playing out in community after community. It creates a difficult tension for President Trump, who wants both to accelerate AI and slow energy spikes for consumers.
- Campaigning in a barn in Pennsylvania last year, Trump said: "Your energy bill, within 12 months, will be cut in half. ... We have more energy under our feet than any other country. I call it liquid gold."
Yet the AI frenzy is juicing demand for energy-hungry data centers, which have raised wholesale electricity prices for tens of thousands of cities, towns and suburbs around the U.S. — from the classic heartland hub of Columbus, Ohio, to the Northern Virginia sprawl known as Data Center Alley.
- And the data center boom is only beginning. In an executive order this summer, Trump said that as part of conjuring "a golden age for American manufacturing and technological dominance," his administration will accelerate federal permitting of data center infrastructure, "including high‑voltage transmission lines and other equipment."
The dynamic unfolds like this, as narrated by Axios national energy correspondent Amy Harder:
- AI = data = energy. Energy is so central to data centers that their capacity is measured — and companies are billed — based on power consumption.
- The data centers promise jobs and economic growth. So state and local officials solicit them eagerly, sometimes making tax break deals that are drawing increasing skepticism and opposition from Oregon to Pennsylvania.
- The AI companies or others racing to serve them pay top dollar for the land, and promise additional benefits to nearby communities to build there.
- But they require awesome amounts of energy to power and cool the football-field-size facilities. Oftentimes, this means they can easily outbid consumers for the finite energy supplies.
That's a big — and increasingly controversial — reason why consumer electricity prices have risen an average of 6.5% over the past year across the U.S.
- The average masks big discrepancies between and even within states. Specific communities where data centers are most prolific face the brunt, including Maryland and Virginia.
- Over five years, wholesale electricity costs have risen as much as 267% in areas near U.S. data hubs, a Bloomberg analysis found last month.
Reality check: It's not just data centers. Lots of complicated factors fuel power prices, including system maintenance and increased reliance on electricity for a range of things like cars.
- A "Bring Your Own Power" boom has some tech companies building their own power plants to fuel data centers, resulting in "an energy Wild West that is reshaping American power," the Wall Street Journal reports.
Friction point: Alongside higher prices, opposition to data centers — a rare bipartisan issue — is popping up in campaigns and legislatures from coast to coast. It's a "populist backlash that cuts across party lines," as Fortune put it.
- Multiple proposals for data centers in the Richmond, Virginia, region have been rejected or withdrawn in recent months, Axios reported this week.
- And power capacity is an area where China is lapping the U.S.: China boasts that it produced more terawatt hours of electricity last year than the U.S., EU and India combined.
What's next: Electricity costs are almost certain to climb in the years ahead for densely populated areas of the mid-Atlantic and Midwest. The projected price of future power capacity in America's largest grid has jumped more than 1,000% in just two years, due largely to the energy demand of AI centers.
- An AP-NORC poll out this week found that electricity bills are already a "major" source of stress for 36% of U.S. adults.
The bottom line: America no doubt holds the possibility for a domestic energy golden age — but not if consumers foot the bill. Add energy to the list of AI topics that could soon be make-or-break political issues.
- Go deeper: Data centers see pushback across the country.
