Key facts
- Big Tech companies are pushing back on paying for shared grid infrastructure upgrades.
- A Senate report claims companies' promises to cover costs apply only to their own facilities.
- Companies oppose a "but-for" standard where they pay for upgrades not built without them.
- A Duke Energy settlement requires data centers to prepay for dedicated equipment and post collateral for shared upgrades.
- The grid's aging infrastructure is a significant factor in the cost debate, predating AI's rise.
Big Tech companies are reportedly pushing back against covering the full costs of shared power grid upgrades necessitated by their data centers, despite a prior pledge to do so. A report released by Senators Elizabeth Warren, Chris Van Hollen, and Richard Blumenthal details findings from an investigation into seven data center operators, including Amazon, Google, Meta, and Microsoft. The senators' report indicates that the companies' promises to pay for their own infrastructure do not extend to the broader grid upgrades their operations trigger.
These companies are opposing a "but-for" standard, which would require them to pay for any shared upgrade that would not have been built without their presence. They also object to proposed minimum bills that would require them to pay for a high percentage of their contracted power demand, even if not fully utilized. This pushback comes after a settlement in North Carolina, where Duke Energy, along with Amazon, Google, Meta, and Microsoft, agreed that data centers would pay upfront for costs to connect to the grid. However, the settlement's specifics involve prepaying for dedicated equipment and posting collateral for shared transmission upgrades, with the question of direct charges for shared costs deferred to a future study.
Meanwhile, grid operator PJM's proposal for new, large data centers to secure their own power capacity or face potential grid strain was largely rejected by FERC. This regulatory landscape, coupled with the aging state of the US power grid—with a third of transmission and half of distribution infrastructure near or beyond its useful life—adds complexity to the debate over who should bear the cost of necessary upgrades.