Why aren't the data centers footing the bill? If they want to suddenly spawn GW of load out of thin air then they can pay for the needed infrastructure without pushing that burden to other customers. Power companies have demand metering which offsets the cost of ensuring there is capacity available for commercial and industrial customer loads. Something similar should be levied against large single point of use customers like this.
Why should they? If demand for X goes up, and price goes up, the whole point of the price system is to incentivize all users of X to use less and producers of X to make more.
Here's an example where the benefit is obvious:
Say I set up a desalination plant for a city with water shortages. I use a lot of electricity; this drives up electricity prices. But I also sell the more scarce water, lowering the price of water. If I make more selling the water, then to first order I'm helping people overall- they value the water more than the electricity. Perhaps I put other, less efficient desalination plants out of use, or simply other uses of electricity that people value less than the water I provide.
Because utilities are regulated monopolies that exist to benefit society. The companies building data-centers are well aware that the system isn't setup to handle a customer that suddenly doubles or triples the electric demand of a whole town over night. They are taking advantage of that until someone steps in.
Electricity production isn't a free market in the vast majority of municipalities. Market systems only work when demand and supply are relatively unconstrained. In this case, supply is strongly constrained.
Yeah, the issue with your example is that it's not a desalination plant serving local customers, but rather the entire world via a network. So rural customers have to pay for negative externalities that benefit others geographically distant from them. The benefit is not purely localized. Of course data centers bring jobs etc. I don't think we should ban them... but community level politics exist for a reason -- those that live in a geography should control the land surrounding them.
I'd say there's a bit of a difference, and I live in a city that's been dealing with that as a problem over the last couple of years.
If you have a pro sports team in your region, then you have mindshare among a significant chunk of the American public for months out of the year through broadcasts, blogs, articles, and now sports books. If you are, oh, I don't know, Kansas City, it might get you mindshare you wouldn't have otherwise. It's hard to put a price tag on mindshare, so cities think that it's worth it.
If you have a data center, you have... a data center. I don't think "jeeze, I need to go up 29 or 35 to Iowa soon" each time I spin up a new GCP project in us-central1.
Ultimately a lot of states - particularly in the middle of the country - have political power that is held by rural interests, regardless of whether that's where most of the population lives in that state. Missouri is an example of this: two major progressive-leaning cities and two mid-sized college towns that puts about 60-70% of the population as urban, but very rural/conservative state government. That state government is made of people who don't grasp what the hell a data center is, how it's run, and what it brings to the local economy. They think it's a slice of Silicon Valley, but it's not (and honestly, thank God for that), and it won't bring that sort of employment, but they can't suss that out.
Because they can make the rest of us pay for it and historically there's been little pushback against that. That's changing, but that's why they shove it off on the rest of us.
Socialize costs, privatize gains. If they didn't try to make someone else pay for it, some activist shareholder might attempt to make them try it. Then all of the other players in the space copy the same playbook and now it's practically mandated that if you want to compete in the data center development market, you must make someone else pay for the electricity, lest the returns on such an investment lag behind those who do.
The map in this article just shows density of data centers in each state. They do cite this [newsweek article](https://www.newsweek.com/map-shows-electricity-costs-in-ever...) which does include a table that shows residential electricity cost changes by state.
- "The state-level numbers make that abstract claim concrete"
- "That’s not a market failure. That’s a policy choice."
And the map doesn't seem to link with the information in the article, and states like Hawaii don't link up at all with the points made. Very little data to back it up too, and instead it's linking to its own site. One weird example is when Microsoft is mentioned in regard to covering its own costs, but the link goes to an article about a protest at a Microsoft data center and has nothing to do with the pledge.
A brief skim of a few other articles on the site have similar issues. Is there a way to ignore or down-vote an entire domain?
The article mentions this, but this is an opportunity not a problem.
If a hyperscaler wants to connect a 500MW datacenter, great. That's a huge investment, with various positive externalities. Requiring the builders of the datacenter to also pay for whatever transmission, substations and generation upgrades their demand requires is just not that big of a deal compared to the total size of the investment, which is part of why companies like Microsoft and Anthropic have committed to doing just this.
The article notes that some states are already moving to require this, and more should do the same.
There's a huge opportunity here; the AI buildout is probably the biggest wave of private industrial investment in decades, if not ever, and it comes at a time that we need to accelerate the buildout of our electrical grid. Let's have the hyperscalers pay for it in a way that makes this positive sum for everyone.
As an aside, it's kind of funny that this article reads like it was written by Claude.
Why aren't the data centers footing the bill? If they want to suddenly spawn GW of load out of thin air then they can pay for the needed infrastructure without pushing that burden to other customers. Power companies have demand metering which offsets the cost of ensuring there is capacity available for commercial and industrial customer loads. Something similar should be levied against large single point of use customers like this.
Why should they? If demand for X goes up, and price goes up, the whole point of the price system is to incentivize all users of X to use less and producers of X to make more.
Here's an example where the benefit is obvious:
Say I set up a desalination plant for a city with water shortages. I use a lot of electricity; this drives up electricity prices. But I also sell the more scarce water, lowering the price of water. If I make more selling the water, then to first order I'm helping people overall- they value the water more than the electricity. Perhaps I put other, less efficient desalination plants out of use, or simply other uses of electricity that people value less than the water I provide.
> Why should they?
Because utilities are regulated monopolies that exist to benefit society. The companies building data-centers are well aware that the system isn't setup to handle a customer that suddenly doubles or triples the electric demand of a whole town over night. They are taking advantage of that until someone steps in.
Electricity production isn't a free market in the vast majority of municipalities. Market systems only work when demand and supply are relatively unconstrained. In this case, supply is strongly constrained.
Yeah, the issue with your example is that it's not a desalination plant serving local customers, but rather the entire world via a network. So rural customers have to pay for negative externalities that benefit others geographically distant from them. The benefit is not purely localized. Of course data centers bring jobs etc. I don't think we should ban them... but community level politics exist for a reason -- those that live in a geography should control the land surrounding them.
>they value the water more than the electricity
and yet I have a hard time believing they value the electricity less than the AI.
Let them drink tokens!
Because VCs are pumping fantasy money into the AI bubble and their data centers are pricing regular people out of daily neccessities?
The market isn't some magic tool to get optimal results. It's a way for capital to self-reproduce, not more, not less.
Similar to why do wealthy owners of sports teams make the public pay for their new stadiums or threaten to move the team?
I'd say there's a bit of a difference, and I live in a city that's been dealing with that as a problem over the last couple of years.
If you have a pro sports team in your region, then you have mindshare among a significant chunk of the American public for months out of the year through broadcasts, blogs, articles, and now sports books. If you are, oh, I don't know, Kansas City, it might get you mindshare you wouldn't have otherwise. It's hard to put a price tag on mindshare, so cities think that it's worth it.
If you have a data center, you have... a data center. I don't think "jeeze, I need to go up 29 or 35 to Iowa soon" each time I spin up a new GCP project in us-central1.
Ultimately a lot of states - particularly in the middle of the country - have political power that is held by rural interests, regardless of whether that's where most of the population lives in that state. Missouri is an example of this: two major progressive-leaning cities and two mid-sized college towns that puts about 60-70% of the population as urban, but very rural/conservative state government. That state government is made of people who don't grasp what the hell a data center is, how it's run, and what it brings to the local economy. They think it's a slice of Silicon Valley, but it's not (and honestly, thank God for that), and it won't bring that sort of employment, but they can't suss that out.
> Why aren't the data centers footing the bill?
Because they can make the rest of us pay for it and historically there's been little pushback against that. That's changing, but that's why they shove it off on the rest of us.
Socialize costs, privatize gains. If they didn't try to make someone else pay for it, some activist shareholder might attempt to make them try it. Then all of the other players in the space copy the same playbook and now it's practically mandated that if you want to compete in the data center development market, you must make someone else pay for the electricity, lest the returns on such an investment lag behind those who do.
The map in this article just shows density of data centers in each state. They do cite this [newsweek article](https://www.newsweek.com/map-shows-electricity-costs-in-ever...) which does include a table that shows residential electricity cost changes by state.
The map is a sad attempt at a choropleth with no legend, no hover or interactivity, and no information whatsoever other than opacity.
Crap article. Why is it filled with LLM-isms?
- "The state-level numbers make that abstract claim concrete"
- "That’s not a market failure. That’s a policy choice."
And the map doesn't seem to link with the information in the article, and states like Hawaii don't link up at all with the points made. Very little data to back it up too, and instead it's linking to its own site. One weird example is when Microsoft is mentioned in regard to covering its own costs, but the link goes to an article about a protest at a Microsoft data center and has nothing to do with the pledge.
A brief skim of a few other articles on the site have similar issues. Is there a way to ignore or down-vote an entire domain?
There is incredible irony in having a giant distracting color swirly and unnecessary AI tab on the right side of the article.
Its not even true. Paradoxically they lower power bills.
Indeed. It's not even really baffling, just load density supporting better economies of scale, translating into cheaper overall end rates.
The article mentions this, but this is an opportunity not a problem.
If a hyperscaler wants to connect a 500MW datacenter, great. That's a huge investment, with various positive externalities. Requiring the builders of the datacenter to also pay for whatever transmission, substations and generation upgrades their demand requires is just not that big of a deal compared to the total size of the investment, which is part of why companies like Microsoft and Anthropic have committed to doing just this.
The article notes that some states are already moving to require this, and more should do the same.
There's a huge opportunity here; the AI buildout is probably the biggest wave of private industrial investment in decades, if not ever, and it comes at a time that we need to accelerate the buildout of our electrical grid. Let's have the hyperscalers pay for it in a way that makes this positive sum for everyone.
As an aside, it's kind of funny that this article reads like it was written by Claude.