Amid all the head-spinning plot twists in the summer blockbuster thriller Eddington—in which Joaquin Phoenix, as a small-town sheriff in the summer of 2020, confronts everything from the COVID-19 lockdowns to online radicalization—one villain stands above the rest: the mysterious “Hyperscale Data Center Development” looming above the town.
In real life, sprawling data center facilities have proliferated at an astonishing rate to house servers that store our digital data in the cloud, power big tech companies like Google and Amazon, and host advanced computing chips that train increasingly powerful AI models like OpenAI’s ChatGPT. As these hyperscale data centers multiply, public opinion surveys—including a new poll released in October by researchers at the University of Chicago—have found that many Americans are worried about their implications, and particularly their massive energy and water consumption.
There’s no doubt that the rise of data centers is placing intense new demands on an already strained electric grid. Electric utilities and power providers were already hard-pressed to replace their aging infrastructure and repair the damage from Western wildfires, Atlantic hurricanes, and other climate disasters before they needed to factor in these huge new customers.
Major energy industry players such as PJM Interconnection, the nation’s largest regional grid operator and supplier of much of the electricity in the Mid-Atlantic, are blaming the rise of data centers for recent electricity price hikes. Over the last few years, the costs of monthly electricity bills in the U.S. have risen at more than twice the rate of inflation.
Clean energy advocates, climate activists, and just-plain energy consumers may want to think twice, however, before they demonize so-called hyperscale big tech companies simply because they want to build more data centers.
As the U.S. clean energy industry continues to face considerable headwinds from President Trump’s relentless attacks on wind and solar, hyperscale data centers’ surging demand for the cheapest and most readily available power sources may prove critical in offsetting some of the worst-case scenarios for our climate and clean energy goals.
The first half of 2025 saw worldwide wind and solar generation outpace the global demand for new electricity for the first time ever. Here in the U.S., growing demand from new data centers are sending a powerful enough market signal to American clean energy developers that, despite President Trump’s emphasis on fossil energy generation, new American wind and solar projects remain cost-competitive and profitable to bring online.
According to the Federal Energy Regulatory Commission (FERC), solar and wind combined accounted for nearly 90% of new electrical generating capacity that was added to the American grid in the first eight months of 2025. At the same time, according to S&P Global, supply chain challenges and mounting construction costs have caused the wait time to build a single new fossil gas-fired power plant to climb to as much as seven years. In some places, the cost of building those fossil gas power plants has more than doubled. Simply put, tech companies cannot maintain the growth of their computing and processing power without connecting to new, clean power generation.
Some of these data facilities can become important demonstration sites for emerging clean technologies like battery energy storage systems and microgrids. Data centers could also substantially reduce their water consumption by adopting more efficient cooling systems or reusing recycled water and wastewater.
Even simpler measures like asking data centers to intermittently cut back their use of power from the grid to provide more flexibility to utility operators could reduce the need for utilities to build too much new power generation—which is costly regardless of the source.
A recent study by researchers at Duke University found that even “modest flexibility measures” that incentivize data centers to briefly reduce their grid usage during overall system-wide peak consumption times could allow utilities to integrate 100 GW worth of new power data center customers with “minimal impact.” To put that into perspective, the Hoover Dam generates 2 GW of electricity each year.
Even the Trump Administration appears to be on board with the concept of “flexibility demand” from new data centers. In a letter last month, Energy Secretary Chris Wright called on federal regulators to draft a new rule encouraging utilities to expedite the connection of new data centers to the grid if they are “curtailable and hybrid facilities.”
If—and, to be fair, this remains a big if—big tech companies follow through on their commitments to power their data centers with clean energy and integrate more flexibility and resilience into their operations, they could also finance a substantial piece of the cleaner electric power system that’s a vital part of any plausible pathway to solve climate change.
But it would be naïve to think these profit-driven mega-companies will do this out of the goodness of their hearts or to fulfill their voluntary sustainability pledges. The real leverage that can and should move these literally power-hungry companies toward cleaner generation sources will come from the highly regulated electric power system they will need to connect to in order to access the energy they seek.
State policymakers— in my home state of New Mexico and my current state of North Carolina—are weighing how to responsibly regulate this rapidly growing industry in the public interest.
In addition to making new data center developers—rather than all of us—shoulder the costs of the new generation they are asking to add the grid, state lawmakers and utility regulators should incentivize—or even mandate—new data centers to power their operations with clean and affordable electricity sources.
One promising policy structure to consider scaling is the first-of-its-kind “clean transition tariff” approved by Nevada regulators in early 2025, which allowed Google to pay a premium rate in exchange for an agreement to power data centers with geothermal energy.
What regulators shouldn’t allow without serious skepticism and pushback are proposals like the latest Carolina Resources Plan put forward by Duke Energy in October that would power new data centers by delaying the closure of existing coal and gas plants and possibly lock in decades of new harmful pollution through the buildout of even more fossil gas facilities.
Concerned citizens should also raise questions about state-level legislation designed to attract data center development that may undermine broader climate goals. This include a law passed last year in New Mexico carving out an exemption from the state’s Energy Transition Act, which requires power providers to move toward zero-carbon electricity by 2045, for hyperscale data centers that power their operations with on-site microgrids.
That new law has already opened the door for project developers of the massive-scale “Project Jupiter” AI data center in southern New Mexico to seek approval to build fossil gas-fired turbines on their proposed site with the capacity to generate 700 to 900 MW of electricity, enough to power the equivalent of around 800,000 homes. Even if those turbines aren’t connected to the surrounding electric grid, they will still emit unhealthy and climate-warming pollution.
This could prove to be a real inflection point for the energy transition. With the right policies in place, it’s possible for data centers to play a heroic role in the effort to build a cleaner and more sustainable future. Without them, we risk doubling down on the fossil fuel consumption that has led us into a deepening climate crisis.
Russell Bargmann , MEM/MPP '27 , Environment & Energy Policy
After serving for a decade as the Speechwriter for U.S. Senator Martin Heinrich (D-N.M.), Russell Bargmann returned to his education to pursue a Dual Degree Master of Public Policy at the Duke Sanford School and Master of Environmental Management at the Duke Nicholas School. On Capitol Hill, Bargmann had a front-row seat to substantive climate and energy policy leadership and supported Senator Heinrich’s contributions to landmark legislation like the Great American Outdoors Act and Inflation Reduction Act and his formation of the Senate AI Caucus and Bicameral Electrification Caucus. At Duke, Bargmann hopes to build new technical skills, deepen subject-matter expertise on the clean energy transition, and intentionally pivot his career toward opportunities where he can help his home state of New Mexico confront a more arid and uncertain climate future and transform from a fossil-fuel-dependent economy into a national leader in clean energy production and environmental justice.