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Decision-makers must do their due diligence to prioritize the needs of a community before the needs of a data center.
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.
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?
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.
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.
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.
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:
The cost of doing business with dirty fossil fuels isn’t worth it. The fight to put people over profits always is.
"Millions of lives are at risk this week as extreme heat scorches our country," said one campaigner. "Trump and his billionaire buddies will have blood on their hands."
With extreme temperatures fueled by human-caused global heating gripping much of the United States, a coalition of more than 150 advocacy groups on Tuesday urged federal, state, and local elected leaders to ban potentially deadly utility disconnections, increase worker protections, and tax polluters to finance renewable energy.
The Center for Biological Diversity (CBD) led two letters—one to Democratic congressional leaders and another to governors and mayors—arguing that U.S. President Donald Trump "has put millions of lives at risk by dismantling federal agencies and lifesaving programs that help working families keep their homes cool and survive deadly heatwaves like the one this week."
"Since taking office Trump has stripped Americans of access to lifesaving measures, including the Low-Income Home Energy Assistance Program and Low-Income Household Water Assistance Program, which help more than 8 million working families pay their utility bills," CBD noted.
"Every day of extreme heat in the United States claims about 154 lives."
The Trump administration has also laid off staff at the Federal Emergency Management Agency, "crippling the agency's ability to help communities before and after disaster strikes. And the country's first-ever proposed federal heat standard, which would prevent heat-related illness and injury in workplaces, is stalled after staff cuts at the Occupational Safety and Health Administration."
CBD said that extreme heat is the deadliest weather-related phenomenon, "claiming more lives each year than hurricanes, tornadoes, and floods combined."
"Every day of extreme heat in the United States claims about 154 lives," the group added. "In the past seven years there has been a nearly 17% increase each year in heat-related deaths. Among those most harmed by extreme heat are outdoor workers and children."
The diverse groups signing the letter—which include Climate Justice Alliance, Food & Water Watch, Free Press Action, Friends of the Earth U.S., Sunrise Movement, and Utility Workers Union of America—centered the voices of people who are most vulnerable to exposure to extreme heat, including outdoor workers like José, a Florida roofer.
"I've felt dizzy, weak, unable to breathe, with cramps, and my heart beats very fast, desperate," the 24-year-old said. "The heat suffocates me and many times I've been close to going to the hospital. While working on the roofs, it feels like the heat is over 110°F or 115°F and we only take one or two short breaks. I need this work to survive, but as the summers get hotter, I worry that one day I will collapse."
CBD senior attorney and energy justice program director Jean Su said in a statement Tuesday that "millions of lives are at risk this week as extreme heat scorches our country. Trump and his billionaire buddies will have blood on their hands."
"Corporations are taking advantage of working people and stripping them of access to lifesaving utilities, clean water, and a safe and resilient future," Su added. "Congress and especially state leaders must deliver emergency relief and tax greedy polluters who are endangering our lives and the climate. Everyone deserves heat-resilient homes, schools, and workplaces."
Will Humble, executive director of letter signatory Arizona Public Health Association, said: "We're not asking for the moon here. We're just looking for state and federal officials to help keep people alive during the summertime."
"Heat kills as many people in Arizona as influenza and pneumonia, and every one of those heat deaths is preventable," Humble added. "The least our elected officials can do is make sure people have places of refuge from these deadly fossil fuel-driven heatwaves. We also need stronger limits on summertime electricity shutoffs, so people aren't dying because the utility company has turned off their power."
"We're just looking for state and federal officials to help keep people alive during the summertime."
Last week, Oregon became the latest of more than two dozen states to ban power disconnections during high summer heat. However, as CBD and others have noted, utilities still find ways to shut off utilities during hot periods.
Six major investor-owned utilities—Georgia Power, DTE Energy, Duke Energy, Ameren Corporation, Pacific Gas & Electric, and Arizona Public Service—"shut off power to households at least 400,000 times during the summertime," according to a CBD report published in January. Those six utilities raked in $10 billion in profits while collectively hiking their customers' rates by at least $3.5 billion since 2023.
"Mayors and governors must act now with bold, local solutions, including expanded public transit and community-centered strategies like neighborhood cooling hubs," Climate Justice Alliance executive director KD Chavez said in a statement. "We also urge stronger labor protections, including municipal and state-level heat standards, to protect postal workers, farmworkers, and all outdoor workers who are increasingly exposed to deadly heat without adequate safeguards."
"Extreme heat has been endangering communities across the country," Chavez added. "We're feeling it closely this week and know it will only get worse. Our growing dependence on aging buildings, air conditioning and a fragile, fossil fuel-dependent power grid is putting lives at risk, especially in frontline, low-income neighborhoods and U.S. territories without government representation."
Big banks, oil giants, and powerful utility companies sponsor pro sports teams and leagues to protect what social scientists call their “social license” by assuring fans that they are public-spirited, good corporate citizens. But they are not that.
In September, North American professional sports leagues had the opportunity to demonstrate their commitment to protecting the planet during a joint panel at Climate Week NYC, the annual affair cosponsored by the United Nations featuring hundreds of events feting local, national and international efforts to address climate change.
They dropped the ball.
Just three months earlier, U.N. Secretary-General António Guterres castigated coal, oil and gas companies—which he dubbed the “godfathers of climate chaos”—for spreading disinformation and called for a worldwide ban on fossil fuel advertising. Until that happens, Guterres urged ad agencies to refuse fossil fuel clients and companies to stop taking their ads.
The leagues apparently didn’t get the memo. During their panel discussion, titled Major League Greening, representatives from pro baseball (MLB), basketball (NBA) and hockey mainly talked about their long-term goals to shrink their carbon footprint and, to be sure, they have come a long way since I wrote about their initial efforts to reduce their energy, water and paper use back in 2012. They also talked about their budding alliances with climate solution experts. But there was no talk of cutting their commercial ties with the very companies that are largely responsible for the climate crisis.
A recent survey of pro baseball, basketball, football, hockey and soccer leagues by UCLA’s Emmett Institute on Climate Change and the Environment found that they collectively have more than 60 sponsorship deals with three dozen oil companies and utilities that burn fossil fuels or distribute fossil gas. Depending on the deal, the companies get prominently placed billboards in team facilities, logos on team uniforms, partnerships with team community programs, or—if they spend some serious money—stadium naming rights.
Eight of the oil and utility companies identified by the UCLA survey—Chevron, Entergy, ExxonMobil, Marathon Petroleum, NextEra Energy, NRG Energy, Phillips 66 and Xcel Energy—are among the top 25 U.S. carbon polluters. Four of those companies—Chevron, ExxonMobil, Marathon Petroleum and Phillips 66—along with four other companies with sports sponsorships—ConocoPhillips, Hess, Occidental Petroleum and Shell—have been sued by state and local governments across the United States for climate change-related damage and their decades of deception, which has served to delay the necessary transition to clean energy. ExxonMobil is a defendant in all 39 lawsuits, Chevron has been cited in 28, and Phillips 66 has been named in 21.
Banks that are still investing tens of billions of dollars annually in fossil fuel projects also have sponsorship deals with pro sports teams. Besides routine billboard deals, six of the 12 largest fossil fuel investors since the Paris climate agreement was signed in 2016—Bank of America, Barclays, Citigroup, JPMorgan Chase, Scotiabank and Wells Fargo—are all spending a small fortune on facility naming rights.
Corporations sponsor sports for two main reasons: to build public trust and increase exposure. According to a 2021 Nielsen “Trust in Advertising” study, 81 percent of consumers completely or somewhat trust brands that sponsor sport teams, second only to the trust they have for friends and family. By sponsoring a team, corporations increase the chance that fans will form the same emotional connection they have with the team with their brand, especially when fans see it repeatedly during a game and over a season. Jersey patches, which the NBA approved in 2017 and MLB approved last year, especially attract attention. Nielsen estimates that the average value of the live broadcast exposure a baseball patch sponsor would receive over a full regular season would exceed $12.4 million.
Another rationale for banks and oil and utility companies for sponsoring pro sports is to protect what social scientists call their “social license” by assuring fans that they are public-spirited, good corporate citizens. Critics call it “sportswashing”—using sports to burnish a reputation tarnished by wrongdoing, in this case, endangering public health and the environment.
Fans of the two baseball teams that battled it out in this year’s National League Championship Series are crying foul, but thus far have been ignored.
In March 2023, environmental activists joined New York City Public Advocate Jumaane Williams to urge the Mets to change the name of Citi Field because Citibank’s parent company Citigroup has invested $396 billion in fossil fuel projects since 2016, second only to JPMorgan Chase’s $430 billion. “Citi doesn’t represent the values of Mets fans or NYC,” Williams wrote in a tweet. “If they refuse to end their toxic relationship with fossil fuels, the Mets should end their partnership with Citi.”
More recently, more than 80 public interest groups, scientists and environmental advocates signed an open letter calling on the Dodgers to cut its ties to Phillips 66, owner of the Union 76 gas station chain. “Using tactics such as associating a beloved, trusted brand like the Dodgers with enterprises like [Union] 76,” the letter states, “the fossil fuel industry has reinforced deceitful messages that ‘oil is our friend,’ and that ‘climate change isn’t so bad.’” Since August, nearly 22,800 people have signed the letter, which urges the team to end its sponsorship deal with the oil company “immediately.”
Unlike the North American pro sports leagues, advertising and public relations agencies worldwide are heeding U.N. Secretary-General Guterres’s call. More than a thousand have pledged to refuse working for fossil fuel companies, their trade associations, and their front groups. If the leagues were serious about sustainability, they likewise would sever their relationships with the godfathers of climate chaos and the banks that enable them.