Data Centers and Rising Energy Demand in the US
Ensuring rising demand can strengthen—not burden—the grid, communities and the planet.
Data centers power artificial intelligence, digital services and much of the modern economy. But their rapid expansion across the United States is driving steep growth in electricity demand and putting pressure on water, land and local communities. Some projections show expected data center loads in certain regions will rival those of entire cities.
While data centers loom large today, they are far from the only driver of this unprecedented electricity demand growth. The electrification of homes, industry and transportation — essential to decarbonizing the broader economy — is adding vast amounts of energy demand to the grid. Meanwhile, entirely new load sources, including electricity-intensive manufacturing such as semiconductor fabrication and increased need for cooling amidst rising temperatures, are also pushing new demand online.
U.S. energy policies, rules and infrastructure are not set up to handle demand growth of this magnitude and speed. Without smarter planning, we risk higher energy costs for households, increased strain on our aging grid, skyrocketing emissions and disproportionate burden on local communities.
WRI works to bridge these gaps through research and stakeholder engagement.
We have the technology and solutions to align data centers and load growth with U.S. climate, affordability and equity goals. The defining challenge of this era will be implementing them at the necessary pace and scale.
As we look to meet this challenge, we face three interconnected issues: meeting demand sustainably, ensuring state and federal policies enable smart and affordable growth, and delivering benefits while avoiding harm in local communities. WRI is working with key actors across the corporate, government, community, utility and finance sectors to reach these goals.
1. Identifying scalable solutions to meet rising demand, sustainably.
Data centers require an enormous amount of power that is reliably available around the clock.
In many regions, utilities are responding to new load by extending gas plants, delaying coal plant retirements, or building new fossil capacity — risking emissions lock in for decades. And while many companies have clean energy goals, in this new era of soaring demand, it’s becoming increasingly difficult to translate those commitments into results.
To mitigate this challenge, the WRI U.S. Polsky Energy Center works directly with key players including companies, utilities and government representatives at the local, state and federal levels. We help decision-makers plan, finance and implement solutions across the entire energy system. These efforts advance the use of clean energy, increase grid efficiency and utilization, and turn demand into a grid asset—all of which are critical to limit data centers’ impact on emissions and other outcomes.
Solutions include modernizing utility resource plans to enable more direct procurement of clean energy; creating flexible demand-side resources to unlock more capacity; expanding clean, firm power and storage to reduce reliance on fossil generation; and behind-the-meter approaches.
At our 2026 WRI Polsky Energy Center Summit focusing on the demand surge, we gathered energy stakeholders and decisionmakers from across the globe to discuss these solutions, with sessions dedicated to clean energy for data centers, unlocking grid capacity, and industrial decarbonization, among others.
2. Engaging on state, regional and federal policy.
New power plants, transmission lines and water infrastructure become expensive fast. In many states, these costs are spread across all ratepayers. We’re already seeing evidence of households and small businesses subsidizing some of the infrastructure built to accommodate large data centers.
While data centers and other large loads expand rapidly, the rules governing how we plan, build, pay for and operate the grid have largely lagged behind, forcing us to rethink how we use and build infrastructure and procure clean energy as a result. Deliberate and thoughtful policy will be key to driving the changes needed to ensure this growth is clean, affordable and fair.
In our work with governments, utilities and regulators, the WRI Polsky Energy Center advises on ensuring large loads cover all of their infrastructure costs; improving grid planning; upgrading aging infrastructure and incorporating cost-effective grid modernization; enabling demand flexibility for data centers and communities; scaling efficiency and clean firm power solutions; modernizing market design; and reforming regulation, governance and reporting methods so that the costs of the data center boom are shared evenly and efficiently.
For example, WRI manages the PJM Cities and Communities Coalition (PJMCCC) to help local governments engage on wholesale market reforms to address management of large loads and affordability. With an influx of new membership in recent years, especially from jurisdictions affected by data center load growth in Northern Virginia, PJMCCC created a Large Load and Data Center Working Group to provide education on federal, state and local data center legislation, news and more. The group has helped submit letters and feedback in various PJM stakeholder processes, including the recent Critical Issue Fast Path for Large Load Additions.
With these solutions in place, we can avoid unnecessary spending, reduce long-term electricity costs, reduce emissions and make the grid more reliable.
External resources:
- Op-ed in Public Utilities Fortnightly: 4 affordability solutions states and utilities can implement now
- Webinar series: Shaping Local Energy Policy 101
3. Delivering economic benefits & avoiding harm to communities.
Data centers are often sited in specific regions — with more than 60% of data centers located in just 10 states — creating concentrated local impacts, such as:
- Heavy water use, including in drought-prone areas;
- Loss of farmland, forests or culturally significant land;
- Noise and air pollution; and
- Minimal economic benefits relative to burdens.
Meanwhile, communities are frequently engaged late in the process, when there is limited ability to influence outcomes.
As is often the case with jumps in technological progress, the AI boom threatens to disproportionately affect marginalized communities if not managed well.
But while the rise in data centers is all but inevitable, the way it happens is not. With the right policies and structures in place, data centers can limit their negative impacts while bringing jobs and other economic benefits to nearby communities.
WRI is engaging with local governments, companies and communities to help put these solutions into practice – including better siting and development processes, enablement of more efficient facilities, and community benefits frameworks that ensure both costs and economic benefits are shared fairly.
For example, WRI has hosted discussions with cities and supported a peer learning cohort on managing load growth, including from data center expansion. This cohort looked at solutions such as Virtual Power Plants (VPPs), distributed energy resources, and leveraging AI, alongside strategies for assessing load growth and local approaches including amending zoning laws, updating building codes and strengthening ordinances to address community concerns like noise.
Additional resources:
Aligning Data Center Growth with Climate, Affordability & Equity Goals
Data centers are essential infrastructure — but their growth must be actively shaped by smart policy, not passively witnessed.
Demand management, efficiency and flexibility are among the fastest and most cost‑effective ways to:
- Keep electricity affordable;
- Cut emissions;
- Protect local communities and their water resources; and
- Build public trust in the energy transition.
Handled well, load growth and the AI boom can happen in lockstep with a clean, affordable, reliable and abundant energy future. Without smart policy, they risk undermining it. The actions we take now will determine outcomes for decades to come.
Image by Chad Davis/Flickr
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Insights February 17, 2026
