My Take: Data Centers already powering higher energy costs

That's because the rate the utilities pay for natural gas is passed along to the small business or consumer at a break-even cost. The same is true with electricity. Utilities earn a return on their investment when delivering natural gas or electricity to businesses or residences.

A report from Bloomberg (possible paywall) confirmed that data centers are fueling the rise in electricity costs, even though the build-out of massive sites is in its early stages. Delaware could see its own mega data center near Delaware City. 

The under-the-radar opening of data centers in northern Virginia has already influenced electricity prices in our region.  Virginia is part of the PJM Interconnection grid that also includes Delaware. PJM holds regional electricity auctions that have recently seen sharply higher bids from suppliers. 

Natural gas comes along for the ride, as it is used to generate electricity and power industrial sites. An additional factor is the delivery of LNG exports by ship.

Governors, led by Pennsylvania's Shapiro and Virginia's Youngkin, are threatening to have their states leave PJM. Whether that is possible is a good question.

Any sins committed by PJM are only part of the issue facing a nation and region where businesses and consumers are consuming electricity-guzzling AI tools, such as ChatGPT and technologies from Amazon, Microsoft, and others. (AI checked  for  errors on this post and the above image was generated by ChatGPT.

PJM and others are turning to AI to address the issue of better managing the peaks and valleys of electricity demand. Chipmakers and others are developing ways to reduce power demand.  Wilmington-based Chemours views its refrigerants as a tool for cooling servers that require vast amounts of electricity for HVAC systems.

Delaware, meanwhile, generates a tiny percentage of its own electricity and finds itself in a precarious position. Widely touted options, such as modular nuclear generation plants, are probably a decade away.  

Meanwhile, offshore and even onshore wind is facing pushback from the Trump Administration, which claims that the source of power destroys wildlife, is too expensive, and somehow impacts national security.

Any short-term fixes will come with higher utility bills, even if data centers pay a higher rate. For example, reopening coal-fired plants like Indian River in southern Delaware would do little to address demand, due to their high operating expenses and age.

 And as ratepayers learned, the added costs of keeping these sites on life support are borne by consumers and small businesses.  It's doubtful that PJM's utilities will send bills to Microsoft or Amazon. - Doug Rainey, chief content officer.