AI pledge

Here’s a reality check on Trump’s AI pledge

Trump’s promise to protect power customers’ wallets from data centers covers only part of the costs of expanding AI.

By Zack Colman and Peter Behr

Ordinary Americans are still on the hook for funding the U.S. data center boom — despite President Donald Trump’s promises Tuesday night and the tech industry’s pledges to shoulder more of the costs.

The artificial intelligence industry’s rising demand for power lines, fuel, natural gas turbines, critical minerals, vacant land and other electric-grid essentials is already helping drive up power bills. And Trump’s assertion during the State of the Union that technology companies can pay for their own power generation would address only some of those causes of rising prices, energy industry experts told POLITICO.

“We’re still in the very early innings of this ball game, and it’s really challenging to eliminate all risk,” Lakin Garth, senior director of grid strategy with industry group Smart Electric Power Alliance, said during a recent event for utility regulators. “It’s going to be a real challenge and a real difficult needle to thread.”

In pitching his “ratepayer protection pledge,” Trump said the tech companies “have the obligation to provide for their own power needs. … I’m telling them they can build their own plant. They’re going to produce their own electricity.” But he and the White House offered no details on how the plan would work.

Even so, Microsoft quickly heaped praise on the agreements Tuesday night, and other tech companies such as Google and Anthropic announced cost-conscious pledges ahead of Trump’s speech, in line with reports earlier this month that he would seek data center agreements.

Energy Secretary Chris Wright told POLITICO after the speech that the administration had reached agreements with the “brand-name” AI companies — “all of them.”

“We’ve had a lot of dialogues with data center developers to say, ‘You’ve got to have the American people on your side,’” Wright said as he was leaving the Capitol late Tuesday. He added: “The president’s very keen about the United States leading in AI, but it’s got to be a win for America — not just the Americans that use that AI.”

Wright said that in addition to paying for the generation of the power their data centers will need, the tech companies would also “advance some money to add additions to the grid.”

Analysts have called those commitments positive steps, though lacking in specifics, while Democrats said the pledges aren’t a strong enough guarantee against rising costs.

“A handshake agreement with Big Tech over data center costs isn’t good enough,” Sen. Mark Kelly (D-Ariz.) said on X. “Americans need a guarantee that energy prices won’t soar and communities have a say.”

Nearly 680 data centers are being planned in the United States, according to the data firm Cleanview, requiring the energy-equivalent of 186 large nuclear power plants. The hulking, concrete structures packed with electricity-guzzling servers are powering the AI models that Silicon Valley hails as the forge behind the next industrial revolution. Some of those AI hubs are so big they would require enough electricity to power millions of homes.

The resulting scramble for energy has added to complaints about affordability that Trump has been grappling with since the start of his second term.

The few details that the White House has announced so far about its deals with the tech industry make no mention of many of the burdens that the buildout and planning of large AI data centers could bring to nearly every region of the country.

The waiting list for gas turbines — the most common way of generating electricity for both power plants and data centers — stretches out five years, and prices have more than doubled in that period. Copper and other commodities tied to the data center boom are seeing rapidly rising demand.

Power plants can’t be built fast enough to meet data center demand, and that’s driving up the cost for turbines, said Abe Silverman, an energy researcher at Johns Hopkins University.

It’s as if the ticket for a Taylor Swift concert can be sold to anyone anywhere, Silverman said. “That’s the way a lot of data center developers feel right now,” he added. “It’s unfortunate, but I think it’s a reality that we’re in a bit of a bidding war.”

The largest U.S. technology companies project they’ll spend $600 billion on AI infrastructure including data centers in 2026. Still, concerns also revolve around the prospect that not every data center project will get built, leaving ratepayers stuck with data center costs.

Some utilities have set rates requiring data center operators and other large energy consumers to pay for between 80 and 85 percent of the power they planned to use, even if their projects never materialize. A handful of tech companies have embraced that concept in principle, provided it does not single out data centers.

“We absolutely want to pay our fair share of all costs associated with serving us,” Briana Kobor, head of energy market innovation at Google, said earlier this month at a Washington event. “We also want to make sure that we don’t get too creative in this moment. This is a moment of big uncertainty for our industry, but we’re creating the models now that are going to set us up for decades to come.”

And even if tech companies build their own natural gas generators or solar arrays, they’ll likely need to take some power off the grid. That strains infrastructure, said Travis Kavulla, a former Montana utility regulator and head of policy for home battery storage company Base Power Co.

“They are still going to be using the grid, and they are probably going to be triggering new capital investments,” he said in an email.

The costs of building high-voltage lines also find their way onto utility bills. As to how those costs are ultimately distributed among millions of ratepayers, those details are hashed out by utilities and state regulators — not the White House and tech companies.

“They’re kind of putting this pledge on the wrong entities,” Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program, said of the White House’s emphasis on large data center developers.

While various regions of the country have sharply different electricity markets, the industry was built over more than a century on the principle that the costs of building power lines and electricity generation is shared.

Utilities such as Ohio-based American Electric Power are spending billions of dollars to string high-voltage power lines. PJM, the grid operator in 13 Mid-Atlantic and eastern Great Lakes states, has approved $11.8 billion in new transmission projects. Data centers are the largest recipients. The costs, spread across the 67 million people in the PJM region, are roughly double the past two transmission budgets.

“Most of today’s cost pressure is coming from transmission, distribution, and system readiness, not energy supply,” wrote Brandon Owens, a grid expert and founder of advisory platform AIxEnergy, in an email before the speech. “Those costs remain even if a data center self-supplies generation.”

That includes major, unforeseen costs like storm recovery and upgrades to steel the grid against more extreme weather, which is a significant driver of higher utility bills in places like California.

Understanding those indirect costs is “not straightforward” with so many facilities coming online all at the same time, said Catherine Casomar, co-founder of the Better Data Center Project, which aims to improve transparency and community engagement with data center development.

“There’s a lot of ways that these can cause increased rates that are outside of just paying for the very obvious, direct interconnection and potential new generation costs,” she said.

Part of that risk is the potential financial burden facing customers if Silicon Valley’s big AI dreams fall through.

“You spend $3 billion upgrading the grid. Then the data center doesn’t materialize. Or that data center doesn’t take as much electricity as it was expecting. Who’s left holding the bag?” said Silverman. “It’s Grandma.”