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department of energy
How to Make Sure People and the Planet Don’t Pay for the Data Center Buildout
Decision-makers must do their due diligence to prioritize the needs of a community before the needs of a data center.
Jul 24, 2025
Data centers—the places used to host servers and computers that are needed to process various IT tasks like AI queries—are booming. And the corporations that build them want a lot more land and a lot more power to make them run. These plans continue to grow in scale, and there are no signs of a slow-down.
So, how much energy will data centers need in the future? Nobody is 100% sure, but some experts estimate it could nearly triple in just 5 years, with data centers representing up to 12% of total U.S. electricity consumption in 2028, up from 4.4% in 2023.
Greed Is Fueling Short-Sighted Policies
U.S. President Donald Trump’s Department of Energy has put forth its own forecasts in a recently-published report on resource adequacy and grid reliance, which looked at multiple sources to arrive at a midpoint estimate of around 50 gigawatts (GW) of new load additions needed to meet data center energy demand. Unfortunately, the report uses flawed assumptions that greatly exaggerate projected load growth and retirements of existing fossil plants, while significantly underestimating plans to add new cleaner generation to address potential reliability concerns. This type of misleading, fossil-fuel-friendly narrative is not new for Donald Trump and his administration. This past Independence Day, he signed the reconciliation bill into law, followed by an executive order that promise devastating impacts for the future of clean and affordable energy.
Politics matter here because they set the rules of the game. Without regard for our climate or health at the highest levels of government, data center developers are happily jumping at the chance to meet the energy needs of their facilities with new gas, nuclear, or even proposing to bypass utilities altogether in order to quickly connect to the grid. Despite claims that fossil fuels are needed to keep the lights on, our analysis has shown that it’s actually renewables that support a more resilient grid.
Utilities play a role in this too, of course. In states like Wisconsin, where various data centers have been proposed, utilities are throwing new gas plants at the problem in a poorly planned attempt to keep up with energy demand predictions. They have failed to understand the paradigm shift that load growth from data centers represents, and are instead attempting to solve new problems with old tools.
So much of this reliance on methane gas hinges on corporations following through on their data center plans (which seems antithetical to maintaining commitments to reducing greenhouse gas emissions that many of these companies still hold). But who pays for all this gas infrastructure? And what other risks and costs can we expect if plans fall apart as quickly as they came together?
Ratepayers Bear the True Risk of Fossil Fuel-Powered Data Centers
Utilities are allowed to recover costs and rake in profit via customers’ bills when building new infrastructure like gas-fired generation facilities. This puts ratepayers on the line financially for utilities’ short-sighted decisions, which are often lacking in transparency.
A report from Harvard Law experts recently identified subtle ways in which the costs of data centers are shifted to ratepayers through mechanisms like special contracts, which are offered to big customers by utilities in the form of unique and negotiated rates, but which risk cost recovery shortfalls that all other ratepayers have to later subsidize via higher bills. In other words, utilities cut deals for data centers which increase everyone else’s bills.
Additionally, when data center growth triggers the need for investment in the transmission system, those costs may also get passed down to ratepayers unless state regulators intervene.
The problem isn’t just data centers—it’s what’s powering them, and that dirty power is costly in so many ways.
In short, there are a number of ways in which our current approach to regulating energy systems is not structured to protect ratepayers in the face of this fast-paced tech boom. Profit-driven policies that benefit the already rich, along with little to no transparency into the weedy details of who pays for what, make for a dense and unforgiving mountain of obstacles in the way of an equitable energy future.
But the problem isn’t just data centers—it’s what’s powering them, and that dirty power is costly in so many ways.
A Wisconsin utility got approval to build two gas-fired plants, priced at $1.2 billion and $280 million, which will be repaid through charges added to customers’ electricity bills for the lifetime of the plants. Beyond this upfront cost lies a set of costs that doesn’t often get factored in. RMI, a non-profit focusing on energy systems, argues that the increased reliance on fossil gas brings additional cost risks from bottlenecks in supply of both gas and equipment that are borne by consumers. If these plants turn out to be obsolescent (due to overestimates of load growth or cheaper wind and solar power, for example), the utility’s customers will still have to pay all the utility’s stranded costs.
In addition to this are environmental costs of data centers and the huge health impact costs that come as a result of gas plant pollution.
A massive construction price tag, the costly risks of stranded assets, and the health-related expenses associated with just this one example in Wisconsin should give us pause.
Make Data Centers Pay Their Fair Share
In many places we’re seeing the ways in which policy and regulation is attempting to keep up with ‘Big Data Center’ plans. There is wide recognition that the solutions must include ratepayer protections. Namely, implementing policies that direct large electricity users like data centers to pay for any incremental grid infrastructure and operating costs needed to meet their power demand.
Policymakers and regulators, as well as utilities themselves, have proposed plans to create unique electricity rate structures, or tariffs, for large users. What that means is a big electricity user such as a data center would be subject to rates, terms, and conditions that are more appropriate to how they use energy and their impact on the grid. Even when utilities do initiate a plan like this, stakeholder engagement is crucial to ensuring that protections for ratepayers are well thought out. Requests for contested cases at the regulatory level, such as this one from the Citizens Utility Board of Wisconsin (CUB), allow for a more transparent process that keeps utilities accountable to their customers.
In Oregon, the state legislature passed a bill called the POWER Act, which shifts the infrastructure and service costs associated with rapid load growth to large users. It also includes language requiring data centers to sign long-term payment contracts with their respective electric utilities in order to decrease the risk of data center project developers ducking out early, creating stranded assets, and forcing others to foot the bill of new investments that ultimately aren’t needed.
These democratic processes play an important role in achieving fair and just rules, especially when we remember that this rapid growth in large data centers is unprecedented, speculative, and that the uncertain future of this technology puts those responsible for planning around their energy needs in a complicated position. Utility costs have long been assigned to the customers that cause those costs, at least in theory.
Say ‘No’ to Dirty Data
This trend in planning for proactive rates and contracts for new data center demand is encouraging because it acknowledges that most energy customers are not massive corporations seeking to ride the next big tech breakthrough to profits. Utilities and regulators must also provide stakeholders with transparent information on data center energy and water usage so that ratepayer advocacy can be informed by the most accurate and up-to-date information.
And let’s not forget that at the crux of this conversation lies a critical issue that we previously discussed: the steep cost of using fossil fuels, like gas and coal, to power data centers. There are certain costs that most tariffs don’t cover, including damage to our health due to polluted air, continued overreliance on unreliable sources of energy, and a price too high to conceive at the expense of our planet and future generations.
Ratepayers should not bear the burden of hosting dirty gas plants that put their health at risk, nor should they be responsible for paying higher energy costs to meet data center demand.
In Michigan, stakeholder groups are petitioning for regulations (using the contested case mechanism that I mentioned earlier) that would direct utilities to give priority within data center interconnection requests to those with clean energy plans. Other recommendations from stakeholders include transparent reporting and guidelines for keeping these data centers accountable for their clean energy promises. For a more detailed explanation of these efforts in Michigan, check out this blog from my colleague, Lee Shaver.
Minnesota, meanwhile, passed a bill last month that resulted in mixed feelings for many. The legislature extended tax breaks to 2,042 for data centers in the state, which would benefit big developers and likely bring more projects to the state. However, the bill also revoked a tax exemption on electricity bills, making data centers more accountable for their energy use. Utilities will also be prevented from passing on these costs to their other customers or avoiding the state’s 100% clean electricity mandate. Not only that, but a new data center fee was introduced that would direct funding toward weatherization programs for low-income residents to make energy-efficient upgrades. The bill did fall short on robust commitments to issues like natural resource protections.
People-First Solutions
There doesn’t seem to be a singular right way through these challenges (see Elon Musk’s xAI project in Memphis for an example of the wrong way), but some guiding principles might help:
- Decision-makers must do their due diligence to prioritize the needs of a community before the needs of a data center. The benefits of economic growth should be distributed through equitable and just channels.
- Ratepayers should not bear the burden of hosting dirty gas plants that put their health at risk, nor should they be responsible for paying higher energy costs to meet data center demand.
- Utilities must prioritize the use of renewables, efficiency, energy storage, and other grid-supporting technologies to meet new demand, relying on viable and adaptable long-term planning rather than an arbitrary urgency that risks further overreliance on fossil fuels.
- Utility plans and data center information should be made accessible and transparent to the public, including any grid impacts resulting from data center energy demand.
The cost of doing business with dirty fossil fuels isn’t worth it. The fight to put people over profits always is.
Why Did DOE Axe $3.7 Billion in Clean Energy Projects Days After a Global Climate Alert?
This is not simply a policy mistake. It’s a calculated abdication of leadership for a fleeting political win.
Jun 02, 2025
On Friday, the U.S. Department of Energy announced the cancellation of 24 clean energy and industrial decarbonization projects. The agency claimed this move would save taxpayers $3.6 billion. But the real cost—economic, environmental, and geopolitical—will be far greater.
The decision came just days after the World Meteorological Organization warned that the planet has a chance of breaching 2°C of warming within five years. Around the same time, Norway’s $1.8 trillion sovereign wealth fund—the largest in the world—projected that climate risk could erase 20% of its U.S. equity holdings. While other nations mobilize to confront escalating threats, the United States—the largest economy on Earth—is retreating. This is not simply a policy mistake. It’s a calculated abdication of leadership for a fleeting political win.
We’ve seen this pattern before. From “beautiful, clean coal” to climate denial in congressional hearings to billions in fossil fuel donations, the Republican Party has long treated climate action as a culture war wedge. Clean energy is no longer debated on the merits—it’s dismissed as “woke,” undermined not out of ideological consistency, but political convenience. Market-based climate solutions could align with core conservative values: competition, energy independence, national security. Instead, Congress continues to treat policy as performance—enabling headlines over outcomes, symbolism over strategy.
The consequences are immediate, and they are devastating.
We didn’t just cancel 24 projects. We canceled momentum. We canceled trust. We canceled a framework that had finally begun to reconnect federal capacity with local ambition.
Tens of thousands of potential jobs vanished overnight. The canceled projects spanned over a dozen states—from Alabama and Texas to California and Massachusetts. Cities like Birmingham, Baytown, Toledo, Zanesville, Modesto, and Holyoke had been preparing for long-overdue industrial upgrades: electrified glass furnaces, carbon-captured cement kilns, regional hydrogen hubs. These weren’t theoretical moonshots. They were shovel-ready projects with partners in place. Economic development agencies were mobilized. Union halls were staffing up. Community colleges had launched clean workforce programs. Then came the call: It’s over.
DOE’s rationale? These projects didn’t offer sufficient return on investment. But no cost-benefit analysis has been released. What we do know: The canceled projects would have reduced over 9 million metric tons of carbon dioxide annually—the equivalent of taking 2 million cars off the road. These weren’t speculative technologies. They targeted sectors like steel, cement, chemicals, and paper—industries where emissions can be reduced, but not without public investment.
This wasn’t just climate policy. These were air quality improvements in neighborhoods with decades of industrial pollution. These were middle-class jobs, modernized infrastructure, and new revenue streams for local governments. They signaled that decarbonization could drive renewal—not austerity. That message mattered, especially in regions where federal support has long felt abstract or nonexistent.
So why cancel them?
Because it made for good optics. Many of the projects were located in red or swing districts. Cutting them allowed Republicans to posture against “wasteful” spending and energize their base. It transformed serious infrastructure investments into political theater. And Congress went along—not out of principle, but out of paralysis.
DOE now says it will redirect resources to long-horizon technologies: fusion, quantum computing, and artificial intelligence. These are important pursuits. But they won’t cut emissions at a cement plant in 2028. They won’t lower energy costs at a food processing facility next year. And they won’t create jobs in Modesto or Toledo.
There’s nothing wrong with moonshots—unless they come at the expense of shovel-ready progress.
Because these projects weren’t paper proposals. Local governments had hired staff. Contractors were preparing bids. Manufacturers were retooling supply chains. Students had enrolled in new clean industry training programs. With no warning, that entire ecosystem has been upended.
That decision undermines more than climate credibility. It erodes trust in governance itself. How can communities build long-term economic development strategies if federal support can be revoked without explanation? Why would private investors stay at the table when the public sector walks away midstream?
Meanwhile, other nations are surging forward. The European Union is investing in clean steel and cement. Canada is building out low-carbon supply chains. Norway is doubling down on green industry. And China is scaling solar, electric vehicles, and hydrogen at unprecedented speed—cementing not only energy dominance but geopolitical power.
For an administration that brands itself “America First,” this is anything but. It is a strategic withdrawal—from economic competitiveness, global leadership, and the industrial future itself. We are ceding the next era of manufacturing—not just to allies, but to adversaries.
And none of this should be surprising. The Trump administration has been explicit about its intent: Strip climate out of agency missions, dismantle regulatory capacity, and discredit climate science. But the deeper failure lies in what Congress has allowed. The legislative branch is no longer functioning as a check on executive excess. It has become a bystander to the dismantling of public purpose.
We didn’t just cancel 24 projects. We canceled momentum. We canceled trust. We canceled a framework that had finally begun to reconnect federal capacity with local ambition. We walked away from thousands of jobs, millions of tons in emissions cuts, billions in co-investment—and a fragile sense of possibility.
And we did it for a press cycle. To placate donors. Fully aware of the consequences.
The cost won’t just be measured in carbon. It will be measured in time lost, in broken partnerships, in shuttered training programs and shelved contracts. And in the widening distance between the future we could build—and the one we keep choosing instead.
Trump Cares More About Growing Fossil Fuel Profits Than Shrinking Your Energy Bill
Many things the Trump administration does are simply designed to waste energy, because that is good for the incumbent producers, i.e. Big Oil.
May 20, 2025
It would be tempting to dismiss U.S. President Donald Trump’s many functionaries as idiots, because many of them are. Here, for instance, is a transcript of leaked audio from a recent staff meeting led by acting Federal Emergency Management Agency director David Richardson, a man with no experience in disaster management (but who did write what the reliable Kate Aronoff described as a bad autobiographical novel with the inspired title War Story). Anyway, put yourself in the place of the FEMA staff hearing this highly relatable anecdote:
The other day I was chatting with my girlfriend, she's from Texas. She's got like huge red hair. Like, she's from Texas. And I said something and she said, well, you know, oh, I know what it was. I said, how come it takes so long to drive 10 hours from Galveston to Amarillo? And she said, well, you know, Texas is bigger than Spain. I didn't know that. So I looked at the map. Texas is huge! I mean, if you put it in the middle of Europe, it takes up most of Europe up. However, they do disaster recovery very, very well, and so does Florida, okay. So, we should be able to take some lessons learned on how Florida and Texas do their disaster recovery, we’ve got to spread that around and get other folks do it some way. And there should be some budgeting things that they have, I bet. I bet Gov. [Greg] Abbott has a rainy day fund for fires and tornadoes and disasters such as hurricanes, and he doesn't spend it on something else.
But if there’s endless idiocy at work (some of it as cover—if I was taking flak for my $400 million flying bribe I’d start tweeting about Taylor Swift and Bruce Springsteen too), there’s also a kind of underlying feral cunning. All the stupid stuff heads in the same direction.
For example, the administration announced earlier this month it would get rid of the Energy Star program, which rates various appliances by their efficiency so that consumers (and landlords and building owners) can make wise choices.
“The Energy Star program and all the other climate work, outside of what’s required by statute, is being de-prioritized and eliminated,” Paul Gunning, the director of the Environmental Protection Agency (EPA) Office of Atmospheric Protection, told employees during the meeting, according to the recording obtained by The New York Times. Mr. Gunning’s office itself is also slated for elimination.
This is a program begun by Republicans—former EPA administrator William K. Reilly wrote a fond reminiscence yesterday for The Washington Post, who pointed out that if you were actually worried about, say, waste, then this would be the last program to cut:
The program costs $32 million in annual federal outlays to administer but has saved consumers $200 billion in utility bills since 1992—$14 billion in 2024 alone. The averted air pollution, which was the EPA’s initial objective, has been considerable, equivalent to the emissions of hundreds of thousands of cars removed from the road.
But what if you wanted to burn more fossil fuel? What if you wanted to stretch out the transition to cheap, clean renewable energy? Well then it would make a lot of sense.
Or take last week’s news, from EPA administrator Lee Zeldin, who vowed that he would eliminate the “start-stop” technology in cars because “everyone hates it.” This feature keeps your car from idling at stoplights—when you tap the accelerator the car turns back on. It’s not mandatory for carmakers, and drivers can turn it off with a button. But, as Fox News points out,
The feature can improve fuel economy by between 4% and 5%, previous EPA estimates showed. It also eliminated nearly 10 million tons of greenhouse gas emissions per year as of 2023.
Meanwhile, Energy Secretary Chris Wright, according to excellent reporting in Heatmap News Friday, is taking federal money designed to convert a steel plant to electricity and hydrogen and instead using it to convert the steel plant to… the fossil fuel it’s already using. The company, its CEO explained, is working with the Department of Energy (DOE) to “explore changes in scope to better align with the administration’s energy priorities,” and those priorities, of course, are to use more energy.
Occam’s Razor, I think, would lead us to say that many things the Trump administration does are simply designed to waste energy, because that is good for the incumbent producers, i.e. Big Oil. That’s not a particularly sophisticated rule for understanding their actions, but remember: Trump was bankrolled by the fossil fuel industry, and that industry has always wanted us to waste energy. Remember all that endless Trump nonsense about low-flow shower heads? They cut the use of hot water by about 40%. Ditto incandescent bulbs, which use 75-90% more energy, and which Trump is trying to bring back. It’s strange to be pro-waste, but there you are. This administration is garbage in every way.
That all of this costs consumers money is obvious—but we don’t really pretend to care about consumers any more. Remember: two dolls and five pencils apiece. No, the ultimate customer for the Trump administration is the oil industry. And really for the GOP as a whole: It became increasingly clear this week that the Republican congressional majority is all too willing to gut the Inflation Reduction Act, even though that will come at a big price to consumers, in its effort to help Big Oil.
And Big Oil is in trouble. Power demand in New England hit an all time low in late April, because so many homes now have solar panels on top. In, um, Saudi Arabia solar arrays are springing up left and right. Bloomberg’s David Fickling chronicles the “relentless” switch toward spending on clean energy, albeit too slowly to hit the most important climate targets. A new global poll of business executives found that 97% were eager to make the switch to renewable energy for their companies, on the grounds that
Electricity is the most efficient form of energy, and renewables-generated electricity a value-add to businesses and economies. In many countries, fossil fuels, with their exposure to imports and volatility to geopolitical shocks, are a liability. For business, this isn’t just inconvenient. It’s dangerous. Volatility drives up costs, turns strategic planning into guesswork, and delays investment.
That’s how sensible people with sensible goals—like making their businesses work, think. But it’s exactly the opposite of how our government now imagines its role. The DOE put their strategy pretty plainly in a filing to the Federal Register last week: Their goal, they said, was “bolstering American energy dominance by increasing exports and subsequently the reliance of foreign nations on American energy.” If you’re a foreign government, that about sums it up: Either you can rely on the sun and wind which shine on your country, or you can rely on the incredibly unreliable U.S. China, meanwhile, is essentially exporting energy security, in the form of clean energy tech.
So the goal for the rest of us, as we resist Trump and resist climate change, is pretty clear: Do everything we can to speed up this transition to clean energy, here and everywhere. Solar works, solar is cheap, and solar is liberating.
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