One affordability battle after another: what to do about the growing damage from the AI-fossil fuel industrial complex

"AI Data Centers Are Sending Power Bills Soaring,” Bloomberg News explained in a September analysis of tens of thousands of locations nationwide. In areas near data centers, Bloomberg found wholesale electricity prices jumped as much as 267% above 2020 levels.

Affordability of electricity emerged as a central issue in the 2025 elections, driving unexpectedly large victory margins for candidates running on the issue in states as diverse as New Jersey, Virginia, and Georgia. The New York Times described the results as “the political shocks of data centers and electric bills,” guaranteeing the issue will be front and center through the elections this November. One expert said, “Electricity is the new price of eggs.”

The rising prices, along with concerns about fossil fuel pollution, water resources, and job loss, have driven a rebellion against data centers that is both grassroots and bipartisan. Tens of billions of dollars in data centers were derailed last year. And more than two hundred consumer and environmental groups signed a letter to members of Congress, calling on them “to support a national moratorium on the approval and construction of new data centers.”

Politics is often like Newtonian physics, with every action driving an opposite reaction. So, last fall, the big AI “hyperscalers” like Google, Meta, and Microsoft launched an industry counteroffensive, the AI Infrastructure Coalition. Google’s own AI calls it “the lobbying arm for the massive buildout required to power and house artificial intelligence.” The Coalition told Axios that one of its goals is to “push back on increased scrutiny of the industry.”

Meta by itself spent $6.4 million to run pro-data-center TV ads in key states in November and December, asserting “We’re bringing jobs here. For us, and for our next generation.” Meta’s categorical assurances are at cross purposes with the many declarations by other tech leaders, including Bill Gates to Elon Musk, who have said AI may automate most jobs.

But the most revealing aspect of the Coalition is that ExxonMobil is a charter member. It’s increasingly clear that the fossil fuel industry sees AI and the data center boom as a lifeline. The industry is already using AI to find and produce more oil more cheaply than ever before. Exxon has been working with Microsoft for years to “generate billions in net cash flow” and expand production by 50,000 barrels per day.

At the same time, “the AI era is giving fracking a second act,” as an October TechCrunch article noted. January data from Global Energy Monitor reveal that over the past two years, the U.S. has tripled the number of gas power plants in development “to meet data center demand.”

As Isabel Gonzalez Whitiker, who lives in Memphis near Elon Musk’s xAI supercomputer, reported last year, “xAI has been operating 35 heavily polluting gas turbines without an air permit, in violation of the Clean Air Act.” In January, the EPA concluded Musk was, in fact, operating the turbines illegally.

In 2024, Exxon announced it would get into the business of designing “massive” gas-fired power plants for data centers using its carbon capture and storage technology—but such technology has never been used on a single commercial gas plant here. In October, CEO Darren Woods told investors, “We’re very, very engaged with most of the hyperscalers on the opportunity.”

Meanwhile, NextEra, another Coalition member and the world’s largest electric utility holding company by market capitalization, is planning to build three data centers with Google. “A lot of those will get started with what I call bridge power — renewables, storage,” the CEO told investors. “We’re also at that same time planning for the gas to come behind it.” For decades, natural gas was promoted as a bridge fuel to renewables. But in our through-the-looking-glass world, renewables are the bridge fuel to natural gas.

The other leg of the data center industrial complex is the Trump administration, which has been focused on making renewables—the cheapest and fastest form of power to deploy—more expensive and harder to deploy. It has even tried to block five big offshore wind projects from completing construction, although federal judges have ruled against Trump in all five cases.

At the same time, the administration has been forcing utilities to revive uneconomic coal plants, which a February report found “could cost US utility customers between $3-6 billion by the end of 2028.” And Trump just ordered the Pentagon to start buying more coal power. This fossil-fuels-first strategy doesn’t just spike energy prices; it leads to ever-higher emissions of greenhouse gases and puts the nation on the fast track to catastrophic climate change.

Trump infamously told oil executives in May 2024 that if they backed his campaign, he would kill the regulations they opposed. Ultimately, by one estimate, they spent “a stunning $445m throughout the last election cycle.”

Similarly, the tech bosses who wanted less regulation heavily backed Trump, led by hyperscaler Elon Musk, who spent over $290 million on the election. Venture capitalist Marc Andreessen and Ben Horowitz each donated millions to a pro-Trump superPAC. Their $90 billion VC firm, Andreessen Horowitz is also a founding member of the AI Infrastructure Coalition.

No wonder Trump has been an aggressive proponent of massive data center projects. Significantly, the Coalition’s Executive Director is Brian Walsh, who ran the pro-Trump superPAC America First Action during Trump’s first term. Coalition co-chair Kirsten Sinema, the former Arizona Democrat Senator turned Independent, became a lobbyist for a data center developer in 2025.

Sinema told the Chandler, AZ, Planning Commission in October that the coalition was working “hand in glove with the Trump Administration as we prepare for AI American dominance.” She warned the city to embrace DCs “or face federal intervention,” as one Arizona journalist put it. Nonetheless, in December, the Chandler City Council voted down the data center 7-to-0.

A final member of the data center industrial complex is the nuclear industry. A December Bloomberg expose, “How a Nuclear-Fossil Fuel Alliance Is Winning the Fight for Energy Dominance,” detailed how the two industries have found common cause in supporting Trump and working to block renewables. Trump’s former Energy Secretary, Rick Perry, even launched his own nuclear power company—before Trump’s own media company merged with a nuclear fusion startup. Worse, Trump has eliminated independent oversight of nuclear reactor safety, which will “severely increase the risk of expensive, unexpected nuclear accidents,” Scientific American warned last year.

Yet, ironically, as my January analysis for UPenn of New York State’s new plan to build several large nuclear reactors explained, “new reactors are the only option that worsens the affordability problem but can’t be built fast enough to help address the AI data center demand crisis.” It’s highly unlikely that much power could be delivered from new U.S. reactors before 2035. But pursuing nuclear will further spike electricity bills long before then, since utilities can raise rates during the construction phase.

So, if nuclear and fossil fuels are anti-affordability and unsustainable, what set of solutions and policies make sense instead?

An affordability agenda for electric power would embrace three core strategies. First, it would have a near-term aim of accelerating proven strategies for reducing both peak demand and customer energy bills. This starts with what has always been the lowest-cost strategy for achieving both of those goals—energy efficiency.

That’s underscored by a new report, “Faster and Cheaper: Demand-Side Solutions for Rapid Load Growth” from the American Council for an Energy-Efficient Economy. The ACEEE analyzed the nation’s largest utility programs and found “energy efficiency and load flexibility are currently the lowest-cost resources for reducing electricity consumption and peak demand.”

Energy efficiency is much cheaper than new natural gas plants and avoids, “the cost, siting, environmental compliance, emissions, and delay issues associated with new generation, distribution, and transmission.” This speed and flexibility matters because as Servaas Storm argued in a December INET working paper, it’s entirely possible that “the AI data-center investment bubble will pop.” If so, taxpayers or ratepayers are likely to get stuck with the bill in places that are in the middle of building power plants when that happens.

A September report by Rewiring America details how “By paying for heat pumps in select homes that currently rely on inefficient electric heating, cooling, and water heating, hyperscalers could meet one-third of their projected additional capacity needs.”

Second, after decades of price drops in batteries, solar, and wind power, battery prices dropped 40% in 2024 with another big drop last year. As a result, “The economics for batteries are unrecognizable,” explained the lead author of a December study. “Solar is no longer just cheap daytime electricity; solar is now anytime dispatchable electricity.” Rewiring America’s report explains how rooftop solar plus storage “can meet 100 percent of data center demand growth,” over the next five years.

Enabling these cheaper, faster, and cleaner solutions will require regulatory and other changes in many states. It thus makes sense for states to consider putting in place in place a temporary moratorium on data centers to give them time to develop enforceable rules to protect its citizens from the rate increases that have led to popular uprisings against data centers around the country.

This article is also published on Institute for New Economic Thinking. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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