Mark P. Mills is founder and executive director of the National Center for Energy Analytics and author of “The Cloud Revolution.”
In his State of the Union address last month, President Donald Trump said tech companies “have the obligation to … build their own power plants as part of their factory, so that no one’s prices will go up.” A week later, tech executives attended a White House ceremony to sign a pledge to pay the full cost of their energy requirements, including new power plants. It’s an effective endorsement of something that has already started: private electricity grids.
Public utilities generate and distribute nearly all the electricity used in the United States. These are the companies that send you an electricity bill. But the data centers fueling the artificial intelligence boom require an unprecedented amount of power. So much, in fact, that their needs are disrupting the public utility model that has dominated the supply of electricity for over a century.
After utility companies spent the past two decades shutting down conventional power plants and replacing them with episodic wind and solar power, the surge in new demand caught them flat-footed and threatens to boost already rising electricity bills. With the rapid expansion of data centers, public utilities and their regulators could blame rising costs on tech companies, rather than on their own decisions. But if private grids meet an increasing share of new energy needs, it will be hard to blame Big Tech if public grids keep getting more expensive and less reliable.
A recent surveyrevealed the degree to which this shift to private power is already occurring. It found that one-fifth of planned data center power needs are set to come from private grids with another third unannounced. A similar survey showed nearly one-third of planned data center power will come from private sources and concluded that “speed to power is all that developers care about.” For data centers hoping to use public grids, delays are becoming increasingly common as utilities push out feasible dates for connections or bend to increasing “data center resistance.”
Data centers are being built far faster than most utilities can make decisions, much less construct power plants and transmission lines. Why? The public utility sector is mired in byzantine regulations, political manipulations, mandates and wishful thinking, especially the absurd notion of an energy transition. This can leave private grids as a key solution for the urgency of tech’s growing energy needs.
The rise of private grids emerges from the unprecedented consequence of two intersecting trends: the scale of the power needed per AI facility, combined with the staggering velocity of AI construction. Hundreds of data centers are planned, each with a power demand exceeding 100 megawatts, and many requiring far more. For perspective, 200 megawatts can meet the power needs of a small city. It’s very rare to find a single facility at one of these scales, never mind hundreds.
If public grids were to build enough new power plants to satisfy the speed and size of the data center boom, consumer electricity rates could jump as much as 40 percent, according to one estimate. The North American Electric Reliability Corp. has warned that data center energy demands will exacerbate already degraded reliability and could even destabilize public grids. Private grids can keep all those consequences isolated from impacting public grids.
Private grids aren’t new. In 2024, industrial-sector private grids generated 3.5 percent of the nation’s electricity, enough to power New York City several times over. But if current plans for data centers materialize, this new class of demand could consume nearly one-fifth of all U.S. electricity before 2035, according to many estimates. It would be a tectonic shift if most of that ends up supplied by private grids.
The U.S. has the energy resources and power engineering capabilities to meet that challenge. The technology and resource choices are the same whether deployed on private or public grids. The difference is one of priorities, permissions and speed.
Public grids will remain critical to the ongoing challenge of reliably and affordably lighting, heating and cooling homes and offices. Some public grids will be able to accommodate a portion of the AI boom. But private grids will be critical for insulating the public from the financial and reliability impacts of meeting most of the fast-growing power demands.
At the White House meeting this month, special adviser for AI and crypto David Sacks said that “President Trump has championed the idea of letting our leading AI companies become power companies.” Big Tech has a history of big disruptions in markets it enters. This is true not only with information-centric businesses but also for hardware services in supply chains, including delivery trucks and aircraft, grocery stores, taxis, semiconductor chips and warehouses. Another shake-up is coming. And with real competition finally coming to the electricity sector, everyone stands to benefit.
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