In his State of the Union address on Tuesday night, President Trump laid out new guidelines for Big Tech’s AI developers: Bring your own power, and pay your own way.
Under a new “ratepayer protection pledge,” companies building out AI data centers — which consume enormous amounts of energy — will be required to fund their own electricity usage going forward, Trump said.
“We have an old grid, it could never handle the kind of numbers — the amount of electricity — that’s needed,” Trump said. “So I’m telling [companies] they can build their own plant; they’re going to produce their own electricity.”
Details of the new agreement remain sparse, but Energy Secretary Chris Wright said after the State of the Union address that “all of the brand-name hyperscalers” have signed onto the deal, according to Politico. That category would presumably include companies like Alphabet (GOOG), Meta (META), and Amazon (AMZN).
The announcement comes as domestic energy demand and prices have soared.
According to estimates from the Lawrence Berkeley National Laboratory, power demand from US data centers doubled between 2018 and 2024 and could triple by 2028. The average retail price for electricity reached 17.24 cents per kilowatt-hour in December, roughly 6% higher than the same time the year prior, according to government data.
The issue has been a persistent thorn in Trump’s side. On the campaign tail, the president promised to cut electricity bills by half, but prices have instead surged throughout his second term on the back of the growing AI industry.
Americans, are concerned that “energy demand from AI data centers could drive up their electricity utility bills,” Trump said on Tuesday.
In the service region for PJM Interconnection, the country’s largest grid operator, capacity prices — the price utilities must pay to generators for electricity — have exploded, rising to $329.17 per megawatt-day for the 2026-2027 period from $28.92 in the 2024-2025 period.
For their part, AI hyperscalers and developers have already made independent pledges to pay for their energy use.
In January, Microsoft said it would pay utility rates high enough to fully cover its data center energy costs and replenish more water than its US data centers consume, and OpenAI said the ChatGPT maker would “commit to paying our own way on energy, so that our operations don’t increase your electricity prices.”
The following month, AI developer Anthropic (ANTH.PVT) became the latest company to announce a cost-reduction policy, stating that it would “pay for 100% of the grid upgrades needed to interconnect our data centers, paid through increases to our monthly electricity charges.”
