AI Data Centers: Big Tech's Impact on Electric Bills, Water, and More

This buildout is happening all across the country. While the size of the facilities is startling, their energy use is even more dramatic. A January 2026 report by Bloom Energy, an on-site energy company, predicts that U.S. data centers’ total combined energy demand—how much electricity they may use when up and running—will nearly double between 2025 and 2028, jumping from 80 to 150 gigawatts (GW). That’s like adding a country with the energy needs of Spain in just three years.   

The companies leading the AI data center boom say their developments can generate economic growth and jobs, and a number of tech executives recently signed on to a White House-sponsored pledge aimed at limiting their effect on residential electric bills. 

However, many local residents and consumer advocates see mainly downsides to the expansion of data centers.

“People are starting to be really, really aware that these projects tend to be very extractive and bring very little to local communities,” says Kasia Tarczynska, senior research analyst for Good Jobs First, a watchdog group focused on government and corporate accountability in economic development. “And that’s where there’s a huge pushback across the country.”

Consumer Reports is urging the industry to back up its pledges with detailed contracts and progress reports that can be monitored by the public, says Chris Harto, CR’s manager for sustainability advocacy. “This is ultimately about trust. Companies need to show—clearly and verifiably—that they’re paying their own way, not driving up everyone else’s electricity bills or harming the environment.”

As new, and ever-larger, AI data centers continue to spring up, here’s what everyone should understand about their impacts—and a growing backlash.

By 2028, data centers could use 12 percent of all the electricity consumed in the U.S., according to the Lawrence Berkeley National Laboratory, and that percentage will grow. More regions could start to look like Virginia, already home to nearly 600 facilities with more than 100 more proposed or under construction. According to a Bloomberg News analysis, data centers accounted for almost 40 percent of the state’s total consumption in 2024.

More data centers can mean higher costs. That same Bloomberg analysis found that areas with high concentrations of data centers saw electricity prices jump 267 percent over the past five years. And John Steinbach isn’t the only Virginia resident to see a connection: Nearly three-quarters of voters in the state blame the facilities, largely clustered in Northern Virginia’s Data Center Alley, for rising electricity costs, according to a January 2026 survey conducted by Global Strategy Group and the Chesapeake Climate Action Network Action Fund. 

The worry extends beyond Virginia, too. A November 2025 nationally representative survey of 2,146 U.S. adults by Consumer Reports found that 78 percent of Americans are somewhat or very concerned that the new data centers being built across the country will make their energy bills go up. 

To keep up with the growing demand for power, electric utilities are spending billions to build new transmission lines and power plants. That’s one of the main ways new data centers can drive up home electricity bills, says Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative and co-author of a March 2025 paper exploring how the public is funding Big Tech’s power-intensive facilities. “Utilities are building infrastructure, and then we all pay for it because that’s how the utility business model has always worked,” he says.

Residential electricity costs are also rising because the rush of new hyperscale data centers wanting to draw power from the grid is spiking demand. That drives up prices for everyone, Peskoe says.

What’s more, about two-thirds of the data centers built since 2022 are in areas already experiencing water stress, according to a Bloomberg News investigation. That includes parts of Texas. The state is already home to roughly 400 data centers, according to Data Center Map, an industry research company, and it is now contending with the introduction of massive campuses. One planned site, called Project Matador, will house 18 million square feet of data centers—plus four nuclear reactors and a natural gas power plant. The developer, Fermi America, plans to use hybrid air/water cooling systems and says it is investigating the use of recycled water to conserve resources. However, experts at the Houston Advanced Research Center and the University of Houston believe the increased water demand from this project and the dozens of others popping up across Texas will strain supplies in coming years. 

In Arizona, another water-stressed state, companies have built, or announced plans to build, 26 data centers since 2022. An analysis by Ceres, a nonprofit advocacy group, found that data centers around Phoenix already use approximately 385 million gallons of water per year for direct cooling needs. And it predicts that amount will skyrocket to 3.7 billion gallons per year once the region’s planned data centers come online. That’s an 870 percent increase—and it’s nearly twice the water needed to supply a city the size of Flagstaff.

Once data centers come online, they can also affect local air quality. Because the equipment inside data centers operates day and night, operators often install fossil-fuel generators that can provide power in the event of a shortage or an outage. In late January, with the threat of bitter cold temperatures and impending winter storms in many parts of the U.S., the Department of Energy gave a preemptive green light to data centers and other “major facilities” to run their generators as needed.

Generators powered by diesel and natural gas can be noisy and emit harmful pollutants that have been linked to cancer, heart disease, and respiratory problems. And because many data centers are built close to homes and schools, these emissions can put nearby residents and children at particular risk. According to a recent Kapor Foundation report, 82 percent of California data centers are located in communities already facing poor air quality.

As AI data center construction outpaces the facilities’ ability to connect to the grid in many areas, some are opting to rely entirely on their own generators. Portable methane gas turbines, for example, power Elon Musk’s xAI Colossus 1 and 2 facilities in Memphis, Tenn., affecting communities already overburdened by pollution. (The company did not respond to CR’s requests for comment.)

This “behind the meter” development strategy is increasingly common: Forty-six planned data centers, with a combined capacity of 56 GW, will avoid connecting to the grid altogether, according to an analysis by Cleanview, an energy data company. Companies that build and operate data centers say that generating power on-site can reduce strain on the grid during peak times, and potentially keep consumer electricity bills in check.

Some of this new power could be supplied by cleaner sources. But for now it will overwhelmingly be generated using fossil fuels.

After months of intense opposition from Indianapolis residents, for instance, an attorney representing Google announced at a September 2025 city-county council meeting that the company was pulling its rezoning proposal for a $1 billion data center project planned for the southeast side of the city. The room, filled with people holding signs, erupted in cheers. “For a long time, it felt like we were four people with cardboard swords fighting a monster,” one resident told More Perfect Union after the meeting. “But tonight it shows that people power still rings.”

Last fall, political candidates in a number of gubernatorial and other state races pledged to take on data centers and rising electric rates, including in hotspots like Virginia and Georgia. Meanwhile, more than 230 environmental organizations collectively called on members of Congress to place a national moratorium on new data centers until, they wrote, “adequate regulations can be enacted to fully protect our communities, our families, our environment and our health from the runaway damage this industry is already inflicting.” 

States such as New York and Maryland have begun to introduce their own legislation that would temporarily halt new data center construction. “It’s time to hit the pause button, give ourselves some breathing room to adopt strong policies on data centers, and avoid getting caught in a bubble that will burst and leave New York utility customers footing a huge bill,” the New York bill’s co-author, Sen. Liz Kruger, said in a statement. 

More broadly, in 2026 so far, lawmakers in more than 30 states have introduced over 300 bills on issues related to data centers, including moratoriums, tax incentives, and energy policy, according to Multistate. 

Tech companies aren’t slowing their planning for new data centers—quite the opposite—but some have begun promising to address consumers’ concerns. 

In mid-January, Microsoft outlined a broad plan, pledging to cover its own electricity costs, reduce water use, create local jobs, and avoid seeking tax breaks. Anthropic, the company behind Claude AI, made its own promise to cover electricity price increases related to its data center development. And in early March executives from those companies and additional tech firms traveled to the White House to sign a nonbinding “ratepayer protection pledge.” Among other measures, companies agreed to “build, bring, or buy” the power needed for their data centers and to pay for upgrades to electric grid infrastructure related to their facilities. 

Harvard’s Peskoe says the pledge “does nothing to help consumers,” since neither the president nor tech companies control who pays for expansions of electrical grids. “Utilities hold the pen on these issues, and utility regulators make the final decisions,” he says.

In statements emailed to CR, tech companies defended the plan. A statement by Brad Smith, president of Microsoft, said, “We appreciate the administration’s work to ensure that data centers don’t contribute to higher electricity prices for consumers.” Anthropic directed us to a tweet by Sarah Heck, the company’s head of public policy that read, in part, “In support of the @WhiteHouse rate payer protection pledge, Anthropic has committed to covering 100 percent of electricity price increases that consumers face from our data centers.”

But consumer advocates are waiting for the details. “Making a commitment is one thing,” says Evan Feeney, CR’s associate director of corporate engagement. “Following through is another.” 

This work is made possible, in part, by a grant from the U.S. Energy Foundation. CR’s work on energy affordability is also made possible by the vision and support of the William and Flora Hewlett Foundation.