Trump faces an AI data center power dilemma ahead of midterms

As anger grows across the US over rising electricity prices ahead of the midterm elections, President Donald Trump summoned major tech companies to the White House on Wednesday to sign a pledge to provide their own energy for artificial intelligence data centers.

Trump has embraced the AI ​​industry as an engine of economic growth and a pillar of national security in the United States’ competition with China. But his alliance with the industry also carries political risks as Democrats focus on the cost of living as they campaign to win back Congress.

Grassroots opposition to data centers is growing in communities across the U.S., with residents blaming the facilities for high utility bills. Trump promised I halved electricity prices in his first year in office. Instead, home prices increased by an average of 6% nationwide in 2025. federal data.

Data centers “need some public relations help,” the president said Wednesday.

“People think that if a data center comes online, electricity prices will go up, and that’s not happening,” Trump said. “This will not happen, and in the regions where it did happen, it will not happen anymore.”

obligation of power

Executives representing Amazon, Google, Meta Platforms, Microsoft, xAI, Oracle and OpenAI signed Trump’s pledge on Wednesday. Signatories include AWS CEO Matt Garman, Oracle CEO Clay Magouyrk, Google President Ruth Porat, Meta President Dina Powell, Microsoft President Brad Smith, OpenAI COO Brad Lightcap, and xAI’s Gwynne Shotwell.

“These companies are committing to provide or pay for all the energy production and electricity needed for AI projects, which is huge,” Trump said. “They will add capacity to the grid by building new power plants where possible.”

However, the agreement does not appear to contain any concrete, binding commitments. Trump’s trade and manufacturing adviser Peter Navarro previously said the White House would “force” tech companies to “internalize” costs related to data centers.

Rob Gramlich, president of the consulting firm Grid Strategies and a former economic adviser to the Federal Energy Regulatory Commission, said the administration faces an uphill battle to translate that commitment into policy that is implemented on the ground.

decentralized rules

The rules governing the electric grid are decentralized across all 50 states, each with their own utility commissions and different laws. Gramlich said states should approve rules requiring data center developers to pay the costs of new energy production.

“The White House can’t do this alone,” he said. “There’s no jurisdiction there, and of course tech companies can’t do this on their own.”

Democrats were quick to criticize the pledge as an empty promise.

“A handshake deal with Big Tech on data center costs is not good enough,” Sen. Mark Kelly of Arizona said Feb. 24. social media post. “Americans need a guarantee that energy prices will not rise and that communities will have a say.”

Implementation challenges

There’s a growing political consensus across the U.S. that data center developers should pay for new transmission and power plants, but such calls may already be too late. According to a Goldman Sachs report published last month, electricity prices are expected to rise 6% by 2026 and another 3% in 2028 as data center demand grows faster than power supply.

The problem is most serious PJM InterconnectionIt is the largest power grid in the United States, covering 13 states, mostly in the Mid-Atlantic and Midwest. The cost of securing power supplies at PJM has risen to $23 in recent years billion attributable to data centers, according to Watchdog Monitoring Analytics. These costs are passed on to consumers.

This amounts to a “tremendous transfer of wealth”, he told watchdog PJM. November letter.

The Trump administration and a bipartisan group of executives in January called on PJM to hold an emergency auction in which tech companies would bid to bring new power plants online.

Energy Minister Chris Wright asked: Federal Energy Regulatory Commission Gramlich said he would take over the authority to connect large data centers to the grid in October, which would allow FERC to require data centers to pay the cost of new transmission. But he said that would not solve the problem of new energy production, which is mostly regulated at the state level.

Gramlich said “you’re going to need a new federal law” for the Trump administration to directly address the issue of bringing more generations online.

political leverage

But as his strongest ally, Trump wields unparalleled political influence over the AI ​​industry. He has not hesitated to put pressure on independent agencies and often uses the bully pulpit of the White House to pressure companies to do what he wants.

“We saw clearly that this was a maximalist policy administration,” said Abe Silverman, who served as general counsel to New Jersey’s utilities board from 2019 to 2023. “There is reason to think that this administration will be able to assert its will more directly than past administrations.”

Politicians across the political spectrum are targeting data centers. Illinois Governor JB Pritzker proposes two-year term moratorium on tax incentives for data centers in his State of the State address on Feb. 18. Sen. Bernie Sanders of Vermont is calling for a data center moratorium. Florida Governor Ron DeSantis has proposed legislation to regulate data centers and protect families from price increases.

Energy Secretary Wright told reporters last week that the administration had warned tech companies that they would face backlash “if they were perceived to increase electricity prices.”

“We want to see data centers developed,” Wright said. “We want to see communities welcome them, but to do that requires upfront investment in the additional grid infrastructure needed.”