AI fueling energy price rises in US – FT
Booming demand from artificial intelligence (AI) has been driving up electricity costs in the US, the Financial Times has reported, citing the country’s largest grid operator (PJM). The surge is at odds with President Donald Trump’s pledge to deliver more affordable energy for American households.
Power use is being pushed higher by energy-hungry AI data centers, especially in Virginia’s ‘data center alley’. In particular, the demand for AI computing has exploded since ChatGPT became a household name, putting growing pressure on the grid. Experts say the boom, along with delays in new power projects and shutdowns of older plants, is forcing utilities to spend heavily on infrastructure.
The PJM grid, which serves 65 million people across 13 states and Washington DC, said on Tuesday it will pay power producers $16.1 billion to meet expected demand between mid-2026 and mid-2027 – a 10% increase on last year. Customers are expected to see bills rise by up to 5%.
The pressure is a blow to Trump’s repeated vow to slash household energy bills by half. Labor Department data shows electricity prices rose 5.6% over the past year, while overall inflation stood at 2.7%.
“It’s unpleasant for ratepayers,” Timothy Fox from ClearView Energy Partners told the FT, adding that “higher auction prices will result in higher bills for customers.”
PJM introduced a cap after prices soared 800% last year. The auction sets payments for producers to supply power during peak demand, helping avoid blackouts. However, this year’s result still came in near the ceiling – at over $329 per megawatt-day.
Rising costs add to inflationary pressure from Trump’s own policies – including global tariffs and his so-called “big, beautiful” infrastructure bill, both of which have added to the burden on American households.
Analysts warn the power crunch will intensify. PJM projects a 32-gigawatt jump in demand by 2030 – nearly all of it from data centers. Tech giants such as Amazon are already scouring the grid for extra capacity, helping drive prices even higher.
