A number of states are moving quickly to protect homeowners from electric rate increases stemming from soaring power demands for data centers that support artificial intelligence operations.
Lawmakers are moving quickly, as power demand for data centers is expected to more than double by 2028, according to a new Standard & Poor Global research study.
Many states do not want to miss out on the economic benefits associated with data centers, but they also want to avoid a consumer backlash in response to soaring rates.
451 Research, part of S&P Global Market Intelligence, has issued a study that says data centers will require over twice as much power by 2028 as they were using at the end of 2024.
The research projects that electric power provided to hyperscale, leased and crypto-mining data centers will hit roughly 58 gigawatts in 2025, up 23% from 47.4 GW in 2024, and double 2024 levels to nearly 95 GW in 2028.
The data center boom, driven largely by the emergence of artificial intelligence, is combining with rising power demands from government electrification policies in transportation and building sectors. Now, local and state officials are scrambling to shield households and other utility customers from the rising costs for supply and infrastructure. States must also prevent a potential capacity crunch.
New Jersey is not now one of the top locations for data centers. It has 79 data centers in 18 markets, concentrated near New York City; closest to Cape May County is a data center under construction in Vineland. However, New Jersey wants to be part of the economic boom associated with the centers. That could make New Jersey vulnerable to the rate impacts of power-hungry data centers, even if relatively few are located in the state, because the state is a net importer of electricity — and thus exposed to market fluctuations.
Another factor is that states are having difficulties meeting their own clean energy requirements because of the rapid growth in electricity demand. Adding complexity, according to the study, is that that the electrical grid is not ready to handle the rapid growth in supply, even if that supply can be generated. Large-scale investments in the grid infrastructure will be an added pressure on prices, and the rates consumers will have to pay.
The S&P report calls on businesses and states to plan for a future that differs significantly from the one that might have been projected just a few years ago.
