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.
No no no! It’s cheaper for them to pay off politicians for special rates and then pass on the cost to the consumer! Won’t you think of the poor billionaires!
Yep. It’s the same reason everyone has to pay more for RAM now, even though consumers didn’t cause the shortage.
The AI data centers are paying their electric bills
This bears repeating. Datacenters do have to pay the light bill. Even when the VC money dries up. It’s a beautiful thing.
Naw, they’ll just declare bankruptcy and the municipalities will foot the bills for the infrastructure debt.
Basically, have you even seen the Simpsons monorail episode? It’s that.
The same way you pay more for gas in summer or when the economy is doing well: demand is higher so prices go up.
Don’t forget that when the bubble pops companies holding the bag will be trying to recoup their initial capital so the price won’t go down.
I’m not sure about that. The way I see it, there will be more supply for the below-expectation demand, which would make prices go down
Ah, but you are forgetting about corporate greed and industry collusion.
Which wasn’t a factor before? 😉
Let me introduce you to a little scam called “price stickiness”
Basically prices are quick to go up but VERY SLOW to go back down… on the opposite side, wages are quick to go down but VERY SLOW to get back up
I never said it would happen immediately 😉
well, if it won’t happen in our life time, I assume it to be “never”
When there is a finite amount of something and someone with more money wants it, it makes the price of it for everyone go up to make it so that some people can no longer afford to compete for the resource, making it available for the higher spender. (Yes there’s also infrastructure being built, but they will out compete us for that too)
Same thing with land & property on it, the working class can’t afford to buy housing now, because rich people want to use housing as an investment vehicle.
Food is another (though also tied to land ownership)
Ultimately it’s the same problem across the board and the solution is generally a wealth tax to prevent densely concentrated capital from distorting the market.
Specifically for these companies, they’re simply too big. They need to be broken up and need to be prevented from getting this size again. If they truly cannot be broken up, they should be nationalised.
Failure to address these issues will result in these companies and people holding a total monopoly on all the resources available. More expensive electricity is only the beginning.
This is the part where I tell you that residential electricity costs are higher to basically subsidize commercialized electricity!! This is how it’s always been even without AI. Not defending it, I definitely think it’s bullshit
AI, and more locally, a windfarm, that they’ve already anlnounced a rate hike ok .15 $/kw to subsidize (this is why i hate say it, but im glad trump canceled wind)
Are why the residential solar company Im working for is more or less booked 2 years out right now, despite the tarifs.5 years ago, our clientele was people doing it for ideological/ environmental reasons, rich prepper types, or just techy nerd types. Now its small buisness owners and middle class families who know they can afford the next price hike but dont think theyll be able to afford the one after. Trust in the utility is gone.
Or is it building the infrastructure to accommodate them the issue?
It’s this, but that’s only part of the story.
Datacenter companies are very efficient at building new ones now, once they have all the proper permits and can start building it can go from an empty lot to fully functional in a year or two. Maybe longer for the huge hyperscalar ones.
Once they are online, their power demand is comparable to a small city, coming online all at once. But the local utility never had this demand in its plan, so they have to build more capacity to service it, and building a new power plant takes much longer. In the meantime, the demand will outstrip their capacity and the utility will have to buy more power on the open market. This drives up costs for all their customers unless the utility is allowed to charge these customers (whose existence has blown up all their capacity planning) more.
As a side note, they often get advantages and tax breaks because they promise to bring jobs to the area. And the initial construction jobs usually are significant. But once the place is built, it’s ongoing operations only requires a few dozen positions, many of them low-tech and outsourced like site security. The higher-tech jobs (like the network engineering) is often not on-site anyway. A shopping plaza would generate more jobs than a datacenter.
Mine is going up 10% next year, got a letter from them. Data center coming soon even though not 1 person in town wants it.
FUCK THESE CORPORATIONS
I think it’s important to input blame in to ALL responsible parties. Fuck the AI companies but “not 1 person in town wants it”? Politicians are people and if they didn’t want it they could stop it or bump taxes so high it would drive them out, if they are not doing anything they are getting something out of it.
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don’t “dehumanize” politicians. They are not gods they are just regular people that you have power to remove.
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Add their names to the list EVERY TIME. AI companies are getting away with a lot BACAUSE of politicians, bribe, lobby etc. They are responsible. Make them understand
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The electric companies have to build more generation and infrastructure to accommodate the huge demand from data centers. The electric companies tend to spread that cost among all customers.
Conversly, accorsing to most of these responses it sounds like if your nearby data center were to mysteriously vanish, your electric bill would go down.
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Here in Texas my rates tripled from last year. I spent more and didn’t cool my house nearly as much this last summer
Where in Texas do you live?
Fort Worth
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I’d like to remind everyone the infrastructure act in 2022 set aside craploads to build out electrical transmission infrastructure. Not that they could have made a difference yet but that money allocated by Congress got pulled back by the executive branch.
Remember that next time your rates go up - we could at least be distributing power across larger areas to effectively increase supply, while also giving more opportunity for power generation to connect.
And since I live in New England, fuck taco Don Quixote in particular for his senseless war against wind turbines - these were like the only new power generation we had about to come online
Republicans.
