I keep hearing how everyone’s electric bills are going up with AI data centers near them. Why aren’t the companies paying the bill? Or is it building the infrastructure to accommodate them the issue?
Its supply and demand. The AI data centers are paying their electric bills, but at the same time they represent a significant increase in demand for electricity, so electric companies can raise their prices.
Expanding on that: in competitive electricity markets, in theory, total demand is met by the cheapest plants (by “marginal price”: how much does an additional unit of electricity cost?) that are available.
The marginal price of PV, wind and hydropower is pretty much zero.
The next cheapest are usually older nuclear fission plants and coal power plants.
Then is a huge gap and then come newer nuclear plants and gas fired power plants.
But all of these plants aren’t built over night. So maybe before all of the datacenters, total demand may have mostly been met by renewables and coal and gas power plants only operated a few hundred hours per year. Now, total demand rises and those plants need to operate more often. That’s why the prices rise just because of demand increase. Other effects (e.g. changes in regulation, corporate greed, …) might be at play as well.
Sure, but the companies driving the increased demand should be paying for the increased capacity directly instead of having the general public subsidize it.
How would that work? With a flat fee or depending on whether ai companies are tipping the scale to a more expensive marginal price within a price period?
Make every kWh above the average power draw have a higher cost and it increases further with every additional kWh.
