ELISSA NADWORNY, HOST:
The construction of huge, new AI data centers has become a political lightning rod. Communities near proposed projects are raising questions about their impact, including on electricity costs. One big question is who will end up paying for expensive new infrastructure needed to power these massive facilities. NPR's Scott Neuman has been looking into that question, and he joins me now. Hi, Scott.
SCOTT NEUMAN, BYLINE: Hi, Elissa.
NADWORNY: So, Scott, most of us know by now that these hyperscale AI centers require a lot of power and upgrades to the electrical grid. Who is paying for all that?
NEUMAN: Well, the simple answer is everybody who buys electricity. That means people who are building and using these data centers for sure, but also local businesses and homeowners and renters, even if they don't think they're using AI. During my reporting this past week, I spoke with Ari Peskoe. He's the director of the Harvard Electricity Law Initiative. He says that, ultimately, everyone is shouldering the burden for the billions of dollars in new upgrades to the electrical grid.
ARI PESKOE: Everyone pays those costs. They're spread across the region to every business and resident that has an electricity meter.
NEUMAN: Now, in many cases, the pace and scale of the demand is coming at - it's really breakneck speed, and that makes all of this unpredictable. The demand for new transmission lines, substations and other infrastructure is ramping up faster than the utilities can keep up in many cases. And that creates an enormous planning challenge. But, you know, Peskoe brings up another interesting point. He says that the speed that all of this is happening can actually drive up the cost of these improvements. Components, things like transformers, are in short supply, and everybody wants them and wants them now. So there's a scarcity, and that makes everything more expensive.
NADWORNY: OK, so we're all paying for the AI upgrades, but how are those costs divided up?
NEUMAN: That's a really tough question to answer. Even if an AI data center is - in your area is the reason for these improvements, everyone is going to be getting the use of them. But Peskoe says no one has really figured out how to divvy up the costs in an equitable way.
PESKOE: There's no agreement as to what infrastructure is for a data center versus for the public. That itself is a disputed point.
NEUMAN: So in 2024, Maryland's Office of People's Counsel, an independent state consumer agency, forecast that new costs due to data centers would run residents as much as $216 a year. But the rapid buildout of these data centers means there's a lot of uncertainty.
NADWORNY: Do individual customers get any benefit from all this new grid infrastructure?
NEUMAN: Yeah, so the fact that everyone gets the use of these improvements to the grid means everyone gets the benefits too. Lucy Qiu is a professor at the University of Maryland who is looking into all of this. She says that in many places, the upgrades are long overdue. They'll be needed for AI data centers, but they'll also be needed for things like meeting the charging capacity for electric vehicles.
LUCY QIU: On the positive side, you can accelerate the upgrade of the grid infrastructure.
NEUMAN: Qiu says studies show that people who live near data centers where the grid has been more - made more robust to accommodate them, those residential rate payers have fewer power outages during extreme weather events.
NADWORNY: All right, so some positive side too, thank you. That was NPR's Scott Neuman.
NEUMAN: Thank you.
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