The data center boom is coming, and states are trying to prepare. From California to Georgia and Virginia, state lawmakers are weighing proposals to blunt the potential impact of artificial intelligence and its voracious energy appetite, write Jason Plautz and Jeffrey Tomich. That includes measures that would place the bulk of power costs on developers — in an effort to stop utility bills from skyrocketing — along with rules that would restrict what power sources data centers can use. Even lawmakers in Texas — known for taking an anti-regulation approach — are considering a law that would raise electricity costs for data centers and even force them to power down if the electric grid is at risk of blacking out. The trend marks a shift in how states interact with big tech companies, which they once courted with offers of tax benefits, subsidies and reduced operating costs. And it comes at the same time that President Donald Trump is pursuing a goal of winning the artificial intelligence “arms race” against countries like China. Trump announced a $500 billion private-sector investment in AI infrastructure during his first week in office. He also signed an executive order rolling back a Biden-era policy that aimed to safeguard against AI risks to the electric grid and consumers. But as the data boom fuels predictions of a dramatic increase in U.S. electricity demand for the first time in decades, even regulators in GOP-led states are increasingly concerned about keeping the grid reliable and power affordable. Data centers’ demand for power could triple by 2028, accounting for as much as 12 percent of the nation’s electricity use, a federally backed study found. In Texas, regulators say the already-fragile electric grid may need to double its capacity by 2030 to meet booming demand. Republican state Sen. Phil King, who introduced Texas’ data center bill, said he wants to avoid a situation where there’s “a data center powered up while the neighborhood literally across the street is without power.” The state is still reeling from the fatal blackouts that struck during a devastating winter storm in February 2021. Increasingly frigid winter mornings and hotter summer nights are only making matters worse. At least some data centers appear to be on board with states’ policy proposals. Dan Diorio, senior director of state policy for the Data Center Coalition, told Jason and Jeff that the industry is committed to paying “its full cost of service.” “Residential ratepayers should not be subsidizing the power that we use,” Diorio said. Some data companies have also been exploring concrete steps to mitigate potential impacts, such as buying power directly from nuclear reactors.
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