Surge in Data Centers Could Reshape U.S. Energy Landscape, Says New Report
The growing demand for electricity, driven in part by the expansion of data centers, is poised to significantly impact household energy bills across the United States. A new report released by the Union of Concerned Scientists (UCS) examines the expected effects of this increased electricity demand on the nation’s power grid, while proposing solutions to mitigate potential economic, climate, and health impacts through clean energy initiatives and ratepayer protections.
Due to the unpredictable nature of future data center growth, UCS explored various scenarios for demand growth and energy policies to accommodate it. The report, titled “Data Center Power Play,” predicts that the demand for electricity in the U.S. could rise by more than 60% by 2050 under a mid-level growth scenario for data centers. Over the next five years, these facilities may contribute to nearly half of the total increase in national electricity demand.
According to UCS, without adequate ratepayer safeguards, the rapid expansion of data centers could lead to over $500 billion in cumulative electricity costs by 2035, potentially reaching nearly $1 trillion by 2050. Additionally, if climate and clean energy policies are not aggressively pursued, the additional fossil fuel usage to power data centers could result in a 19% increase in carbon dioxide emissions from power plants. This could lead to an estimated $1.6 trillion in climate and health damages over the next decade, escalating to $4.5 trillion by 2050.
“Frenzied data center growth with little transparency or guardrails puts the public at risk of massive cost increases,” said Steve Clemmer, director of energy research at UCS and lead report author. “The climate and health benefits and net cost savings of building clean energy to meet future electricity needs are obvious and enormous, but they will not materialize without political support and responsible management of data center load growth.”
To address these challenges, state and federal support for affordable clean energy, along with robust ratepayer protections, is crucial to meeting rising electricity demands while safeguarding public health, finances, and the environment.
Key Findings of the UCS Report
- Restoring federal clean energy tax credits could avoid $248 billion in wholesale electricity costs by 2050.
- Reducing U.S. power sector CO2 emissions by 70% by 2035 and 95% by 2050 could prevent more than $1.6 trillion in global climate damages by 2035, increasing to $13 trillion by 2050.
- Decarbonizing the power sector could also significantly cut air pollution from fossil fuels, translating into $40 billion in avoided health costs by 2035 and $220 billion by 2050.
While decarbonizing the power sector may lead to some increases in wholesale electricity costs, these would be offset by the substantial reductions in health and climate-related damages from decreased fossil fuel reliance. Enhanced ratepayer protections could prevent utilities from transferring data center-related costs onto consumers through higher prices.
“Data centers are already secretly increasing peoples’ electricity bills,” said Mike Jacobs, senior energy analyst at UCS and author of a recent UCS report on loopholes exploited by data center developers to push their costs onto the public. “While some utility companies and data center developers are intentionally misdirecting scrutiny, others are willfully ignorant about their roles in passing costs onto consumers. In a future with immense data center growth, ratepayers shouldn’t be forced to subsidize Big Tech’s profits at the expense of their own health, climate and pocketbooks. State utility regulators have clear authority to assign costs to those that cause them—it’s time they require data center developers to pay their fair share for energy needs that can dwarf that of entire cities.”
The UCS report advocates for stronger policies to expedite the transition to clean energy and establish safeguards to protect communities from the negative impacts and costs of meeting data centers’ electricity needs. It criticizes the Trump administration’s focus on supporting fossil fuel industries, which risks undermining efforts to maintain affordable and reliable electricity.
“The Trump administration has repeatedly worked to derail clean energy deployment precisely when we need it most,” said Julie McNamara, associate policy director for the Climate and Energy Program at UCS. “With surging demand from data centers, the need for plentiful, affordable power has never been higher. Yet instead of clearing the path for the fastest, cheapest, cleanest resources to deploy, President Trump is sidelining renewables just to boost the interests of the fossil fuel industry. People will pay the price: in higher bills, in dirtier air, in lost local investments and in worsened climate impacts.”
You can read the full report here and related blog posts here. UCS also released state fact sheets for Illinois, Michigan, and Wisconsin.
Original Story at www.ucsusa.org