Slow Boring: "Avoiding a data center electricity price apocalypse." Matthew Yglesias has this insightful piece on rising electricity demand + costs. Bringing a new data center online entails not just generation of more electricity but also construction of infrastructure to deliver it reliably. From 2000 average residential electricity prices started out fairly flat, but as is demonstrated in the graphic, by May2025 we were up to 6.5% growth yr-over-yr.The prior flat stretch was due to "increasing energy efficiency of home appliances and the decline of American manufacturing [outweighing] population growth, an increase in the quantity of digital devices, and the early buildout of internet infrastructure." 'Plug-in hybrids, EVs, heat pumps, and induction stoves are [wonderful], and more energy efficient—on net—than things that rely on small doses of combustion.' [For transparency, our home has all 4 of these innovations]. But Yglesias key though obvious point is that unlike earlier iterations of appliance efficiency, these clearly require more electricity from the power grid—not less. Also pertinent is that rising bills consumers have seen this past year are not all because of data centers (note that the increase is unusually high in Maine where there are few data centers and unusually small in Virginia where there are many), but it is important context for the data center issue. AI companies have lots of investor cash + are competing for both talent + infrastructure. "This raises the risk that deep-pocketed tech companies could come to town and overbid other payers for the limited electricity and delivery capacity that already exists, creating a situation in which the typical person’s experience of the AI revolution is mostly that the cost of living goes up." A challenge, yes, but also an opportunity to force these companies to 'pay the cost of new infrastructure they need and that would also serve a wide range of other users.' They perceive themselves as under time pressure + are clearly price-insensitive. Action by public utility commissions + local/state governments must be enlisted to set limits on these tech behemoths. To further limit electricity demand growth, my personal bias is that crypto mining operations be singled out for significantly taxes + regulations, as their work product serves no useful societal gain. I suspect this opinion might be unpopular in some quarters.
