In short
Big Take Podcast Notes
Episode Overview
- Title: AI Data Centers Use a Lot of Energy. You May Be Paying for It
- Host: David Gura
- Guests: Bloomberg reporters Josh Saul and Leonardo Nicoletti
- Description: This episode discusses the soaring energy costs associated with the booming AI data center industry and how these costs are impacting consumers living near these facilities.
Key Topics Discussed
The Impact of AI Data Centers
- Growing Demand for Energy:
- AI technology requires significant energy due to its computational demands, leading to increased electricity usage.
- Data centers are becoming a substantial portion of global electricity consumption.
- Consumer Consequences:
- Residents near data centers are experiencing skyrocketing electricity bills.
- For instance, Kevin Stanley from Baltimore, who lives near "Data Center Alley," reports an 80% increase in his power bill over three years.
- Impacts on his daily life include cutting back on essentials like groceries and medical expenses.
Data Center Hotspots and Price Increases
- Data Center Locations:
- Areas with high concentrations of data centers, such as Northern Virginia, are seeing the most significant increases in power costs.
- Electricity Pricing Dynamics:
- The presence of data centers is linked to rising wholesale energy costs, which are then passed on to consumers.
- 70% of energy nodes near these centers have recorded price increases.
Utility Companies and Infrastructure
- Utility Company Responses:
- Utilities are adapting by creating new customer classifications for data centers, ensuring they cover infrastructure costs associated with their energy needs.
- Despite reassurances from utility companies that data centers are paying their fair share, many costs are still distributed among regular consumers.
- Future Projections:
- Bloomberg NEF estimates that by 2035, data centers could account for over 4% of total global electricity consumption, potentially making them the fourth-largest consumer of electricity worldwide.
Community and Political Reactions
- Local Governments vs. Residents:
- Local governments may welcome data centers for the tax revenue they generate, while residents often oppose the physical presence and increased energy costs.
- Political Discussions:
- There are rising discussions among politicians regarding the sustainability of electricity prices influenced by data centers.
- Pennsylvania's governor, Josh Shapiro, has highlighted the affordability issue caused by these rising costs linked to data centers.
Conclusion
- The Challenge Ahead:
- As the AI industry continues to grow, the challenge of balancing energy demand, costs, and community impacts remains critical.
- Residents like Kevin Stanley are left grappling with the consequences of these developments while advocating for manageable energy costs.
Key Takeaways
- Rising Energy Costs: The explosion of AI data centers is directly contributing to increasing electricity prices for nearby residents.
- Infrastructure Costs: Utility companies are adjusting their rate structures to accommodate the needs of data centers, but some costs are still borne by everyday consumers.
- Community Impact: There is a growing divide between the interests of local governments looking to capitalize on data centers and the residents who face the financial burden of increased power bills.
Additional Resources
- For further reading, access the Bloomberg article [AI Data Centers Are Sending Power Bills Soaring](https://www.bloomberg.com/graphics/2025-ai-data-centers-electricity-prices/?srnd=undefined).
Listening Information
- Where to Listen: Available on Apple Podcasts, Spotify, and Bloomberg.
- Privacy Information: Refer to omnystudio.com/listener for details.
This episode emphasizes the urgent need for communities, utility companies, and tech firms to address the implications of rapidly expanding AI infrastructure on local energy consumption and costs.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00Leonardo Nicoletti:Hey, everyone, it's Emily Simpson and Shane Simpson from the Legally Brunette podcast. Each week, we're bringing you true crime through a legal lens. Whether you want all the facts on the disappearance of Nancy Guthrie or you still need to wrap your head around the ditty verdict, we're breaking it all down step by step. And we're not just lawyers. We're also husband and wife. It makes for some pretty entertaining episodes. Listen to Legally Brunette on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts. Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made.
0:35Leonardo Nicoletti:And I'm Caroline Hepker in London. We're the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday, keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens.
1:12Leonardo Nicoletti:It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube, or wherever you get your podcasts.
1:33Leonardo Nicoletti:Bloomberg Audio Studios.
1:35Josh Saul:Podcasts. Radio. News. Hey, Mr. Stanley, how you doing? Great, how you doing? I'm good. So I'm Josh. We talked on the phone. All right.
1:43David Gura:Earlier this month, Bloomberg reporter Josh Saul visited a man named Kevin Stanley. He's 57 and he lives in Baltimore. more.
1:55David Gura:Josh was in Maryland to report on the effects that data centers have on people who live near them. Kevin lives about a two-hour drive from an area known as Data Center Alley, the world's largest concentration of data centers, topping other hot spots like Iowa and Oregon. And Josh was there to talk to him about one thing in particular, his electricity bill, which has gone up ever since data centers came to the region.
2:20Josh Saul:Kevin's a really nice guy, really interesting guy. And he talked about how his high power bills have had a really rough effect on his life. He has had to cut back on buying the groceries he likes, getting haircuts as often as he likes. He tries to make his diabetes medication stretch out.
2:34Leonardo Nicoletti:The power bills just keep going up and up. And for me, I'm a single person living here. So I'm like, wow. Like, why is the bills going up so much?
2:44David Gura:Kevin is blind, and he lives on disability payments. He says his energy bills are now 80 % higher than they were just about three years ago. And there are days when the utility asks customers like him to use less power to prevent blackouts or encourages them to use less power to save money.
3:01Leonardo Nicoletti:They have days where they tell us don't use any electricity, don't run air conditioning, but it's like 95 degrees. I'll die in here.
3:10David Gura:It can be difficult to pinpoint the exact root of higher electricity bills and strain on the electrical grid. So Josh set out to put some numbers to the growing pressure data centers are putting on local power supply. And he found that at a time of rapid data center construction and investment in AI technology that needs them, demand is driving up wholesale energy costs. And those costs are being passed on to consumers. Josh spoke to some people that, you know, started telling him that their bills were really high. That's Leonardo Nicoletti, a data visualization reporter at Bloomberg, who traveled with Josh and crunched the numbers.
3:46Josh Saul:When we were thinking about it, they seemed to be living close to the hotspots of AI data centers in the United States. The main finding was that, quite strikingly, if you are in an area that is located close to data centers or data center activity, you're much more likely to experience high price increases. Because the massive increase in the demand for AI and the speed with which the data centers get bigger and bigger, I think it's been a huge surprise to all of us.
4:21David Gura:I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, the staggering electricity needs of AI data centers and how you, yes, you, could end up footing the bill.
4:36David Gura:AI needs a lot of energy to work. From summarized answers on Google to chat GPT grocery lists, the rapidly growing technology requires massive amounts of computing power, which requires a lot of actual power.
4:50Josh Saul:We actually quantified this in an earlier story that Josh and I worked together. We compared the total amount of electricity that data centers use yearly to how much electricity individual countries use. And we found that, for example, countries like Italy or Australia are using actually less electricity as a total than data centers use globally. And these numbers are actually higher now because we did this one year ago and electricity demand is growing exponentially from data centers. That number is supposed to keep going up and up. So Bloomberg NEF projects that it's supposed to be over 4 % by 2035.
5:29Josh Saul:of total global electricity consumption. So if you took all the data centers at that point and made them their own country, at that point, they'd be the fourth biggest consumer of electricity after China, the U.S., and India.
5:43David Gura:But what Josh and Leah wanted to understand was whether the huge demand for electricity was showing up on customers' bills. It took us like three months to find the data
5:52Josh Saul:because, you know, it's actually really hard to get granular data on power prices.
5:58David Gura:To get that more granular picture, Leo and another Bloomberg data visualization reporter named Dimitrius Pogkas found a company called GridStatus that collects real-time data from more than 25 ,000 nodes around the U.S.
6:12Josh Saul:A node is like the location on the grid that's connected to transmission lines. And it measures real-time congestion, real-time fuel prices, and real-time supply costs, things like that. And then the different factors that are measured by that node then make up the price.
6:32David Gura:With that data, as well as data on the locations and capacity of data centers from a company called DCByte, the reporters measured the distance between those nodes and areas where there is significant data center activity. They used that to create a data set that showed the price changes recorded in those areas over time, since 2020.
6:51Josh Saul:Essentially, the main finding is that 70 % of nodes that recorded price increases are located within 50 miles of significant data center activity. And if you look at your power bill, you're going to see, in most places, a distribution charge. That's what you're paying for all of the infrastructure, all the wires. But you're also going to see a supply charge. And the supply charge is what you're paying for that wholesale power. So what Leo's research says is by pushing up the price of wholesale power, data centers are putting that upward pressure on your power bill.
7:21David Gura:So effectively, if I open up that bill, I'm not going to see AI data centers as a line item, but it's having that effect on what you're describing. Exactly. Josh says there are two key mechanisms that drive up electricity costs around data center hotspots.
7:36Josh Saul:The first, to really summarize supply and demand, they use a lot of electricity, which can make electricity more expensive. for everybody. So that's one way they can push up customer bills. The other way is that they require a lot of new infrastructure, mostly transmission lines, but also new power plants. And the costs of building that are spread out among all customers, including regular people like you.
7:57David Gura:Monitoring analytics is an outside watchdog that keeps an eye on the largest U.S. electric grid, PJM. And it says that data center development raised costs for customers on PJM's grid, which spans from Illinois to Washington, D.C., by more than$9.3 billion over a 12-month period starting in June. Today, 33 percent of all the electricity used in Oregon is attributed to data centers. In Virginia, it's 37 percent. That's according to data from D.C. Byte and the U.S. Energy Information Agency. Communities in surrounding areas are starting to do the math, and they're also connecting higher bills to data centers.
8:33David Gura:You don't have to see those data centers to see the higher electric bills. That's David Lapp, a consumer advocate from the Maryland Office of People's Council. We don't have in Maryland too many data centers,
8:45Leonardo Nicoletti:so the costs are being driven up by data centers that are out of state largely, and many of them in Northern Virginia.
8:52David Gura:In February, the Baltimore City Council led a hearing on the issue of rising Baltimore gas and electric bills.
8:59Josh Saul:The current state of these BGE bills and the skyrocketing rates is simply not sustainable for our constituents.
9:09David Gura:And one of the people who spoke at the hearing was Kevin Stanley, the man Josh and Leo interviewed in Baltimore.
9:15Leonardo Nicoletti:Right here?
9:16David Gura:Yes.
9:16Leonardo Nicoletti:Good evening, everyone. My name is Kevin Stanley.
9:19David Gura:Kevin didn't know what was causing his bills to spike. He just knew it was a problem.
9:24Leonardo Nicoletti:And there's no reason that Baltimoreans should have the excessive gas electric rates that they have.
9:30Josh Saul:When Josh asked Kevin Stanley what he thought about data centers, his reply was...
9:36Leonardo Nicoletti:So they can say, oh, this is going to help with AI, but how is that going to help me? How is that going to help me pay my bill?
9:45David Gura:So how do utilities decide who fronts the cost? And how are those communities responding? That's after the break.
9:54Leonardo Nicoletti:Hey, everyone. It's Emily Simpson and Shane Simpson from the Legally Brunette podcast. Each week, we're bringing you true crime through a legal lens. Whether you want all the facts on the disappearance of Nancy Guthrie, or you still need to wrap your head around the ditty verdict, we're breaking it all down step by step. And we're not just lawyers, we're also husband and wife. It makes for some pretty entertaining episodes. Listen to Legally Brunette on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Evidence-wise, we had virtually no evidence. In 1995, Detective Tony Richardson was trying to figure out who killed a fellow officer.
Read the full transcript
10:36Leonardo Nicoletti:The case comes down to who is believed and who is ignored. Oh my goodness, we did convict an innocent man. I'm Beth Shelburne from Lava for Good Podcasts. This is Ear Witness. Listen to Ear Witness on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. the social media trend that's landing some gen z-ers in jail
11:03Leonardo Nicoletti:the progressive media darling whose public meltdown got her fired i'm going to take francesco off the network entirely the massive tiktok boycott against target that makes no actual sense i will continue getting stuff from target and i will continue to not pay for it and the maga influencers whose trip to the white house ended in embarrassment so refreshing to have
11:23David Gura:the press secretary after the last few years who's both intelligent and articulate you won't hear
11:27Leonardo Nicoletti:about these online stories in the mainstream media but you can keep up with them and all the other entertaining and outrageous things happening online in media and in politics with the brad versus everyone podcast hosted by me brad palumbo every day of the week i bring you on a wild ride through the most delulu takes on the internet criticizing the extremes of both sides from an independent perspective join in on the insanity and listen to the brad versus everyone podcast on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
12:00David Gura:A team of Bloomberg reporters dug into the rising costs of electricity to see if the rapid construction of data centers in some areas could be to blame. And they found a link. Places with heightened data center activity were more likely to see higher wholesale energy costs, meaning the presence of data centers was raising power prices and eventually pushing up customer bills. I asked Bloomberg reporter Josh Saul about why that's happening when people usually expect to pay for their own utility costs. I think about how I study my electricity bill to the extent that I do. And maybe in the summer, I'm using my air conditioner more.
12:38David Gura:Maybe in the winter, I'm using my heat more. But these are all kind of selfish things. I'm determining when the bill goes up or down. Why should I be paying for the expenses associated with these data centers?
12:50Josh Saul:Well, I think there's two arguments that people make. I mean, the first is that AI, whether you like it or not, is becoming an increasingly large part of our world. So from national security to the argument that we don't want other countries to be way better at AI than we are, to the fact that now our Google searches and even our texts to our friends are guided by or instructed by AI. So there's one argument there that we're all using AI. And there's also an old utility law. The way we do this is that the costs are shared among everyone. So if you build a new house or hook up to the grid as a new business, you don't pay for all of those costs to hook you up.
13:26Josh Saul:It's socialized among everyone on the grid. So utilities are following that general principle now with these large new customers' data centers.
13:36David Gura:It's tech companies that are deciding when and where to build a new data center. Amazon, Microsoft, and Alphabet's Google are the three biggest U.S. cloud providers. In 2024, those companies spent more than$200 billion on capital expenditures, most of it to build new data centers. What's the relationship like between these tech companies that need all of this power and the utilities themselves? Are they paying their fair share? Are they paying a disproportionate amount? How's that shaking out?
14:05Josh Saul:Well, utilities are really excited because it's a huge new customer base for them. And this is coming after decades of very flat growth. At the same time, there's some conflicts. Tech is known for moving fast and breaking things. That's their philosophy. Utilities are known for moving very slow and making sure nothing ever breaks, making sure the lights stay on. So they're working together here. But one thing that we're seeing is that utilities are actively figuring out how to make sure that big tech is paying its share for these data centers. They're doing things like creating new customer classes for data centers to pay differently than, say, residential or small businesses.
14:39Josh Saul:They're creating requirements like data centers have to pay for certain costs, pay for a minimum amount of power over 15 years, even if they use less, putting down collateral, different things like that to protect their existing customers.
14:54David Gura:Josh, Leo, and their team reached out to Amazon, Microsoft, and Alphabet for comment. An Amazon spokesperson said the company works closely with utilities and grid operators to plan for future growth. Microsoft's vice president of energy told them, quote, it's literally our responsibility to make sure that when we come to a community, when we get connected to a grid, that the cost of the infrastructure that's being dedicated to us, that those costs of service get allocated to us. Google said it's been working to use less electricity, even as it expands data centers, and that it supports paying its fair share.
15:27David Gura:What did you hear from utilities about this phenomenon? What do they say about why bills are going up and what they intend to do about it?
15:34Josh Saul:Utilities mostly point to the idea that data centers are paying their fair share. So if a data center requires a specific substation for its operations, the tech company will pay for that. And they'll point to the reforms that they're making in their own rate structure to charge these large load customers differently. All of that's true and all of that's good. But it doesn't change the fact that a lot of costs are still being loaded onto regular customers.
15:59David Gura:Dominion Energy, the utility company that serves Northern Virginia's data center alley, told the reporters, quote, we believe data centers should pay for the full cost of their power. That's how we design our rates, and it's the standard our regulator uses in reviewing them. The CEO of Exelon, which runs Baltimore's utility, said the company is pushing for long-term solutions that are fair and bring peace of mind to customers.
16:21Josh Saul:Talking to one of the utilities, we asked about how they pass these costs on to customers, and their expert said, we sign long-term contracts, so if power spikes up, that's for the power sellers to deal with. Our customer doesn't have to deal with that. However, the next time we sign a contract, if there's been a lot of variability in cost in power prices, and if the power prices have been overall just higher, which happens because of data centers, then the next contract that we sign will be for higher prices. And then, yes, that will get passed on directly to our customers.
16:52David Gura:Now, some communities are starting to have conversations about what it really means to have these big AI data centers in their backyard. Are we seeing communities, are we seeing states push back on this in any way?
17:03Josh Saul:Yeah, I'd say there's more dramatic conversation around the power grid than any time in my years covering it. There was just a summit in Philadelphia where the governor of Pennsylvania, Josh Shapiro, talked about affordability. He talked about these rising bills.
17:19Leonardo Nicoletti:As governor of this great commonwealth, I'm privileged to represent 13 million Pennsylvanians. And I can tell you they can't afford never-ending price increases because of PJM's policies.
17:31Josh Saul:That's something we're seeing from politicians all around. Sometimes there's a little bit of a personality split where, you know, local government's excited for the tax income. They want companies moving in. They want business activity. They want to fund their local school district.
17:45David Gura:In the city of Fayetteville, Georgia, for example, the taxes paid by a new data center developer were expected to bring in over$1 billion in state and local taxes in the next 15 years. Taxes going to the County Board of Education last year covered the equivalent of some half a dozen teachers' salaries.
18:03Josh Saul:Then there's a split between that view and people who live around there who don't want big new transmission lines going through their yards. They don't want big, you know, three Walmarts stacked on top of each other. sized data centers. They don't want all of that around them. So yeah, there can be a lot of conflict in these communities.
18:22David Gura:When you look at projections for the growth of AI data centers, what do they illustrate and what is that likely to mean for the cost of electricity in this country?
18:32Josh Saul:Well, I think it's something that needs to get figured out. Utilities are working on it. They can't have their customers and their regulators and politicians angry at them. Big tech, similarly, very attuned to what people think of them. That's why there's a lot of conversations and a lot of push right now to figure out how to charge data centers for both the power that they're using and the infrastructure that has to be built to supply their data centers.
18:54David Gura:In the meantime, Kevin Stanley is doing his best to deal with higher electricity bills.
18:59Leonardo Nicoletti:You know, they talk about upgrading the grid and this and that, but we don't see it. Especially when you're dealing with low-income people or working-class people they have to feel something. It has to be more tangible. You would tell people, what is the data center? They'd say, well, what is it? We're just surviving.
19:24David Gura:This is The Big Take from Bloomberg News. I'm David Gura. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. Thanks for listening. We'll be back tomorrow.
19:45Leonardo Nicoletti:Hey, everyone. It's Emily Simpson and Shane Simpson from the Legally Brunette podcast. Each week, we're bringing you true crime through a legal lens. Whether you want all the facts on the disappearance of Nancy Guthrie or you still need to wrap your head around the ditty verdict, we're breaking it all down step by step. And we're not just lawyers. We're also husband and wife. It makes for some pretty entertaining episodes. Listen to Legally Brunette on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
20:38Leonardo Nicoletti:latest political happenings in Westminster. Political fix from the Financial Times. Listen wherever you get your podcasts.
From the publisher
AI needs a lot of energy — and a new Bloomberg investigation has found that those soaring costs are being passed on to consumers who live near data centers.
On today’s Big Take podcast, host David Gura talks to Bloomberg reporters Josh Saul and Leonardo Nicoletti about the AI boom’s impact on power bills, how utility companies are handling surging demand and the implications for communities with centers in their backyards.
Read more: AI Data Centers Are Sending Power Bills Soaring
See omnystudio.com/listener for privacy information.
