Compelled to Cut Costs, Tech Tackles AI Power Use

The boom in AI data center construction has prompted a backlash over the rising cost of electricity needed to power the facilities, with government officials calling on tech giants to pay their share.

Large computing centers have largely driven rising power demand.

Microsoft announced such a plan in a blog post by its president, Brad Smith, Tae Kim and Janet H. Cho reported for Barron’s Daily.

Microsoft pledged that any costs to power its AI data centers would not be passed on to the communities where they are located, and that it would not seek breaks from local property taxes for data center buildouts.

The company is asking utility providers to charge large customers like itself higher rates.

Donald Trump posted on social media recently that his administration was working with Big Tech on the plan as it seeks ways to address affordability issues facing many households.

Virginia Governor-elect Abigail Spanberger has also said that tech companies’ data centers must pay their own way and their fair share.

Wedbush Securities analyst Dan Ives said Microsoft is committed to paying utility rates high enough to cover electricity costs, while working with utilities to increase power capacity and minimize water use to ensure local water sources are not depleted.

He expects other Big Tech companies to follow suit.

The Energy Information Administration (EIA) expects electricity use to grow 1% this year and 3% in 2027, marking four consecutive years of rising power demand and the strongest four-year growth period since 2000, largely driven by large computing centers.