A new analysis from the Union of Concerned Scientists warns that the fast-paced construction of data centers could drive up electricity costs for households and businesses, while also creating potential environmental and public health impacts.
The report, released Wednesday morning, argues that demand from data centers is rising so quickly that utilities may struggle to supply enough electricity without triggering higher costs across the grid.
“They’re increasing the demand faster than you can increase the supply. How’re you going to do that?” said Mike Jacobs, a senior manager of energy for the organization.
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The report, titled “Data Center Power Play,” examines several scenarios for electricity demand growth over the next 25 years, along with different policy approaches for how power systems might respond. The goal is to estimate the long-term impact of data center expansion — including potential electricity costs, climate consequences and health-related costs tied to pollution.
“With clean energy policies, we can do this cheaper with less air pollution, less health impacts, less health costs, than doing this business as usual,” Jacobs said.
The study suggests that decisions made now about how utilities plan and pay for new capacity could determine whether the data center boom becomes a manageable load increase — or an expensive, polluting strain on the system.
Jacobs emphasized that one of the biggest challenges is timing. Data centers can often be built quickly, while major grid upgrades and new energy generation projects can take far longer to permit, finance and construct.
He said that mismatch creates a growing tension between fast-moving tech expansion and slower utility planning cycles.
“This is a collision between the people whose philosophy is ‘move fast and break things,’ with the utility industry that has nobody that says move fast and break things,” Jacobs said, in reference to data centers owners’ rapid construction of the facilities.
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The report also points to uncertainty around future power demand, with limited disclosure from utilities and major tech firms making it harder to forecast the true scale of data center growth.
Jacobs said that how demand is met — and who pays for the new generation, transmission and distribution upgrades — will be central not just to electricity affordability, but also to health and climate impacts.
“This is really a great moment for regulators to do what’s within their authority and sort out and assign the costs to those who cause them, which is an essential principle of utility ratemaking,” he said.
As regional officials and utility regulators face increasing pressure to balance economic development with infrastructure realities, the report suggests the debate will likely intensify — particularly in fast-growing data center markets where power demand is surging.
While data centers have become closely tied to cloud computing, artificial intelligence and digital services, the study argues that the industry’s rapid scale-up could come with grid impacts that extend far beyond the facilities themselves — potentially affecting electricity customers across entire regions.
Originally reported by Alan Etter in WTOP News.
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