Driven by the growth of data centers for artificial intelligence,, and electricity prices are surging. In Pennsylvania, some consumers are seeing double-digit price hikes. 

At the same time, President Donald Trump has opposed the fastest growing sources of new energy – renewables. 

Trump’s big tax bill last year effectively ended renewable energy tax credits, slowed renewable projects on public lands and – most recently – his Interior department cited national security in pausing federal permits on several big offshore wind projects.

The Allegheny Front’s Reid Frazier spoke about the intersection of these policies and the nation’s rising electric demand with Julian Spector, a reporter at Canary Media, an independent non-profit news outlet that covers renewable energy, about Spector’s recent article on the issue.

LISTEN to their conversation

https://s3.us-east-1.amazonaws.com/media.alleghenyfront.org/AF011626_RF_EnergySupply.mp3

Reid Frazier: You write that the U.S. could be headed toward an electricity crisis of its own making. What do you mean by that?  

Julian Spector: This is something that I started worrying about last year when we kept seeing different actions by the Trump administration targeting renewable energy. Solar has become the biggest source of new power plant construction by a long shot. The type of power that the utility industry and the broader utility sectors are building now is largely renewables with just a little bit of gas. 

So…you have a White House that’s actively blocking new offshore wind projects, onshore wind projects, they’ve been making things harder for developers building solar on public lands. There’s a whole slew of actions that are happening, reducing the biggest source of new power plant construction.

The type of power that the utility industry and the broader utility sectors are building now is largely renewables with just a little bit of gas. 

At the same time the demand for electricity is going up and up, and that’s [due to] AI data centers, but also there has been a reshoring of manufacturing and those factories use a lot of energy, and people are buying electric cars, and they need more electricity.

So there’s all these very strong trends pushing the demand side way up and much faster than it’s grown in decades at the same time that we’re seeing this contracting of power supply that could have been built, if the government was not choosing to intervene and stop it.  

Reid Frazier: Walk me through what some of the actions the administration has taken that are blocking advancement of more renewable energy?

Julian Spector: The most recent really big news came in December, like right before Christmas. The federal government halted offshore wind projects that were already fully permitted. [Editor’s note: Since this interview was recorded, federal judges have issued temporary orders reinstating some of these projects.]

There were five of them under construction off the Atlantic coast. This really was concerning for the industry, because these projects had gone through these arduous, years’ long processes to get the federal permits and the companies behind them have staked billions of dollars collectively building these huge offshore projects, and mobilizing the type of ships you need, and refurbishing ports to be able to supply them. So to have those sort of suddenly halted mid-construction based on some sort of vague assertion of national security risks. That’s been a big concern for the industry most recently. 

But there are other [actions]. There’s been an effort at the Department of the Interior to not allow new solar and wind projects on federal lands unless they get a personal sign-off from the Secretary Doug Burgum. That has not produced many permissions this past year — only one [project] has gotten new permission to build on federal lands.

There used to be federal tax credits for building wind and solar projects that were set up during the Biden administration in the Inflation Reduction Act, and in the budget bill that the Republican majority in Congress passed last summer, they greatly shortened the number of years that those tax credits exist, specifically for wind and soil. There are [tax credits that are] still going for nuclear and geothermal and batteries, but there’s a specific effort to reduce the credits for wind and solar.   

Reid Frazier: So what effect have all these cancellations meant on the electricity sector? Are people tracking how much renewable energy is now not going to be built?  

Julian Spector: It’s a little tricky because a lot of clean energy did get built last year despite all this. So that was actually a record year for solar construction [and] battery construction. But those projects were in the works for several years leading up to 2025. So the concern here would really be about a few years out that the projects that we’re expecting to come online suddenly aren’t [going to be] there anymore.

Reid Frazier: Besides the strain on the growth of the electric supply, what’s happening on the demand side? Why is there so much demand for electricity right now?  

Julian Spector: It’s probably the most dynamic time in the electricity sector in decades. For the last few decades, the demand growth has been pretty much flat. And that’s thanks to things like efficiency and LED light bulbs. We’re getting more [efficiency] out of our appliances. So we just didn’t need to grow the grid very much. 

Now that’s changing. The AI revolution is a huge part of that. It hasn’t really materialized in a huge way just yet, but the literally hundreds of billions of dollars going into building out AI data centers across the country, they’re all gonna be just gobbling up power. That’s how they operate. They’re basically just huge rooms full of computers. They use electricity to run the algorithms that you’re either training the AI or using AI to do tasks for people. There’s some water usage as well in there, but really the key input is electricity to run those systems.  

Reid Frazier: And to cool off equipment and things like that?   

Julian Spector: Yeah. And a lot of the leaders in the AI industry have talked a lot about this, that access to electricity is a key barrier for them. Because the way the planning works is if the AI company wants to build somewhere, they have to talk to the utility and if the utility runs their study and just doesn’t think they have enough power, you can’t build that data center until you figure that out.

So the AI companies are seeing this as a barrier that might delay a project they want by several years if you’re waiting for the utility to build more wires, or build more power plants. That’s forcing [companies] to get creative too, because there’s a lot of companies trying to figure out ways to build their own energy infrastructure along with their data center so they don’t have to wait for that power.   

Reid Frazier: And in your reporting, did you encounter any bright spots where we could see some solutions emerge? For instance, are some of these companies coming up with different ways to meet their own electricity needs?   

Julian Spector: Last fall, I covered a project up in the Pacific Northwest where a data center company is actually paying for a new grid battery that the utility will build and then own. This is going to cover the key hours of peak demand that the grid wouldn’t have been able to supply. 

The data center company gets to build potentially years earlier than if they’d for the kind of regular grid upgrades. All the people living in this area get to benefit from this grid infrastructure that they didn’t have to pay for, because the data center company paid for it. So far I’ve only heard of that one example of this that’s kind of publicly out in the open now, but from my conversations with sources, a lot of other folks are looking at that model.

So you could imagine a world where the data center companies that have billions of dollars to spend are in fact helping build clean and efficient grid infrastructure.

So you could imagine a world where the data center companies that have billions of dollars to spend are in fact helping build clean and efficient grid infrastructure that everyone can benefit from, as opposed to a world where the cost of new gas power plants are subsidized across all the regular customers who happen to live in that area, even though they’re primarily benefiting some data center that may or may not get built.   

Reid Frazier: What has the Trump administration said about this issue, this rising electricity costs in the U.S.?  

Julian Spector: They have acknowledged it. They tend to assert it’s a hangover from Biden-era policies that were pro-clean energy. I think there is some realization that affordability is going to be a big issue in the election, just as it was last fall in the Virginia governor’s race and New Jersey governor’s race.

[Spector’s article reported: “A Department of Energy spokesperson did not respond to questions about what the administration is doing about the declared energy crisis.”]

That said, I think there’s there’s seems to be some disconnect where if you’re recognizing that there’s a need for more electricity, the efforts to block [renewable] power plants like the huge offshore wind [project] for Virginia, specifically, where so much AI activity is happening, it’s hard to square those actions with the stated goal of winning the AI race. 

Julian Spector is a reporter at Canary Media, an independent non-profit news outlet that covers renewable energy.