Rising electricity prices trigger public resistance; U.S. data centers face challenges; solar power and energy storage will be key in the short term.
```
The wave of AI has sparked a data center construction boom, which is now colliding head-on with America’s increasingly strained power supply and rising electricity prices. US data centers are trapped in a dual predicament of “power scarcity + community opposition,” with solar energy and energy storage becoming key short-term solutions to ease the crisis.
On September 28, according to Wind Chasing Trading Desk, Bank of America Merrill Lynch stated in its latest research report that, taking the PJM power grid that covers 13 states as an example, its power capacity prices have soared in just a few years, directly causing users' average bills in the region to rise by 18% to 25%. Although utility rates are regulated, many costs, especially electricity and capacity prices, are directly passed on to consumers.
This cost pressure is translating into growing social and political resistance. The report shows that at least 12 states across the US have started or are considering new policies to ensure data centers bear the full cost of site selection to power consumption themselves, in order to prevent rate shocks to ordinary consumers. In Virginia, Arizona, and Colorado, some data center projects have already slowed down or been blocked due to concerns over power consumption, water resource depletion, and higher utility costs.
Facing power shortages and obstacles to data center construction, the market is seeking solutions. The report clearly points out that, in the short term, solar and energy storage will be critical to meeting new power demand. These two technologies accounted for 80% of America's new power-generating capacity in 2024, and have been favored by many data center owners with renewable energy goals. However, to ensure grid stability, dispatchable energy sources such as natural gas remain indispensable supplements in the near future, while nuclear energy is considered a long-term option for the 2030s and beyond.
Surging electricity prices, mounting pressure on residents and regulators
The huge demand for electricity from data centers is one of the direct drivers of rising electricity prices.
The Bank of America report details the PJM interconnection grid situation, providing a very clear case through the capacity price changes in the PJM interconnection grid (covering 13 US states).
The research states that the area's capacity market value has soared from $2.2 billion in the 2023/2024 delivery year to $16.1 billion in the 2026/2027 delivery year. Specifically:
The capacity price for the PJM “Rest of Market” region jumped from $29/MW-day in the 2024/2025 delivery year to $269/MW-day in the 2025/2026 delivery year, representing more than a fivefold increase in just one year.
This surge caused the average bill for residential users in the PJM region to increase by 18% to 25%. In the 2026/2027 delivery year auction, the price rose further to $329/MW-day.
This means that the power shortage driven by data centers is, through market mechanisms, being unambiguously translated into an economic burden for residents.
Facing increasing public dissatisfaction with rising electricity bills, local policymakers are under immense pressure.
The report mentions that lawmakers in 12 states have begun acting to establish special rate structures to internalize the costs brought by data centers. This marks an important policy shift: ordinary residents can no longer be made to foot the bill for data centers' power demand.
Bank of America analyst Ross Fowler points out:
State-level legislatures will become the main battleground for the future contest between growth and the public's cost pressures. Regulators may review utilities’ capital expenditures and operating expenses, but have limited power to prevent pass-through of electricity procurement costs. They might alleviate pricing pressures by lowering utility companies’ return on equity (ROE) or slowing capital expenditure approvals, but this could come at the expense of utilities’ growth prospects or service quality.
Power scarcity and community resistance: a dual challenge for data centers
Bank of America Merrill Lynch believes the challenge for data center operators is two-fold: on one hand, there's the physical scarcity of power; on the other, the societal “Not In My Backyard” (NIMBYism) effect.
The report notes that a single hyperscale data center can consume as much electricity as a medium-sized city, reaching 100–300 megawatts, putting huge pressure on an already strained grid.
According to Bank of America Merrill Lynch, the most direct consequence of rising electricity prices is a strong public backlash against data center construction. Community resistance is now a “new and rapidly growing threat.”
Residents’ concerns range from rising electricity bills and water shortages to equipment noise and land-use conflicts. Such NIMBYism has already resulted in practical action in many places, delaying or even halting projects. The report lists several examples:
In Mesa, Arizona, Meta's data center plans have faced strong criticism due to concerns over Colorado River water shortages.In Colorado Springs, Colorado, concerns over power demand and rising electricity prices have slowed several proposed projects.In Prince William County, Virginia, a major project called “Digital Gateway” has faced fierce opposition and lawsuits from residents over noise and land use issues, ultimately resulting in its zoning permit being revoked.In Clayton County, Georgia, approval of new data center construction projects has been suspended until September 2025.
Bank of America Merrill Lynch analyst Justin Post believes AI workloads are even more power-hungry than traditional cloud computing, which will exacerbate power scarcity and community conflicts. This predicament may slow new facility construction, drive up cloud service prices, and even delay the popularization of General AI (Gen-AI).
Short-term reliance on solar and storage; long-term on natural gas and nuclear
To cope with the imminent power gap, energy infrastructure transformation is imperative. The report's analysis holds that, in new power generation and stable power capacity construction, an “all of the above” strategy is required.
In the short term, solar and energy storage are the mainstays. According to the US Energy Information Administration (EIA), new grid-installed capacity reached 48.6 GW in the US, of which about 80% came from solar and storage—specifically, 30 GW utility-scale solar and 10.3 GW storage.
The planned 63 GW of new capacity to be completed in early 2025 shows a similar structure: again about 80% comes from solar and storage, but with an internal shift—energy storage’s share rises (18.2 GW), while solar grows more moderately (32.5 GW), further highlighting system stability in the short term.
Looking forward, in the 2.3 TW grid interconnection queue ( including 956 GW solar, 891 GW storage, 212 GW wind, and 136 GW natural gas), it is clear that solar and storage will maintain absolute dominance.
But Bank of America Merrill Lynch says data centers require 24/7 stable power, which goes beyond intermittent renewables. Thus, dispatchable baseload power is indispensable.
In the short term, gas-fired plants will fill this gap, with turbine orders rising sharply in the first half of 2025. Over the longer term (2030s), nuclear—especially small modular reactors (SMRs)—is seen as the ultimate solution.
Major tech companies such as Microsoft, Amazon, and Google have already started signing agreements with nuclear companies to explore the possibility of powering data centers directly with nuclear energy.
~~~~~~~~~~~~~~~~~~~~~~~~
The above content is from Wind Chasing Trading Desk.
For more detailed analysis, including real-time interpretations and frontline research, please join [Wind Chasing Trading Desk · Annual Membership]
Risk Disclaimer and Disclaimer ClauseThe market has risks, investment needs caution. This article does not constitute personal investment advice and has not taken into account any particular investor's specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their particular situation. Any investment made on this basis is at their own risk. ```