In a sweeping policy shift aimed at taming America’s surging electricity demand, Donald Trump announced Tuesday that artificial intelligence companies will be required to generate — and pay for — their own power as they expand the data centers fueling the AI boom.
The directive, unveiled during the president’s State of the Union address, introduces what the administration is calling a “ratepayer protection pledge,” a framework designed to prevent households from absorbing the mounting energy costs tied to the rapid rise of AI infrastructure.
A Warning About an Aging Grid
Standing before Congress, Trump described the nation’s electrical system as unprepared for the explosive demands created by modern AI computing.
“We have an old grid,” he said. “It could never handle the kind of numbers — the amount of electricity — that’s needed. So I’m telling companies they can build their own plant; they’re going to produce their own electricity.”
The policy effectively shifts responsibility for powering AI growth away from public utilities and onto the technology giants racing to build massive new server farms.
After the address, Energy Secretary Chris Wright said that “all of the brand-name hyperscalers” had agreed in principle to the plan — a group widely understood to include firms such as Alphabet, Meta Platforms, and Amazon.
Behind the announcement lies a dramatic shift in U.S. energy consumption patterns.
A study from Lawrence Berkeley National Laboratory found that electricity demand from American data centers doubled between 2018 and 2024 and could triple again by 2028 as AI adoption accelerates.
At the same time, consumers have already begun to feel the pressure. Average U.S. retail electricity prices climbed to $0.1724 per kilowatt-hour in December, about 6% higher than a year earlier, according to federal data.
The strain is especially visible in regions managed by PJM Interconnection, the nation’s largest grid operator. Capacity prices there — what utilities pay generators to ensure supply — have skyrocketed from $28.92 per megawatt-day for 2024–2025 to $329.17 for 2026–2027.
Tech Giants Were Already Moving in This Direction
Even before the federal push, major AI developers had begun pledging to shoulder more of their infrastructure costs amid public scrutiny.
Microsoft announced it would pay utility rates sufficient to fully cover its data center electricity consumption and replenish more water than its facilities use.
OpenAI said it would “commit to paying our own way on energy” to avoid raising prices for local residents.
Anthropic pledged to fund 100% of grid upgrades required to connect its data centers.
These voluntary commitments helped shape the administration’s broader mandate, which now seeks to standardize such practices across the industry.
Political Pressure Mounts as Data Center Boom Expands
Across the country, the construction surge has sparked backlash from lawmakers and communities worried about land use, water consumption, and rising power bills. At least six states have floated legislation that would temporarily halt new data center projects.
Trump framed the federal pledge as a direct response to those concerns, arguing that shifting infrastructure costs to tech firms would shield households from price spikes.
“No prices will go up,” he said. “And in many cases, energy prices will go down for communities.”
A High-Stakes Bet on Private Power
The White House is also urging PJM to hold an emergency auction allowing technology companies to bid for long-term electricity contracts — a move intended to stabilize supply while encouraging firms to invest in dedicated generation, including nuclear, natural gas, and renewables.
Energy analysts say the strategy represents a fundamental rethink of how the U.S. powers digital infrastructure: rather than expanding public grids to meet AI demand, Washington wants the AI industry to build parallel capacity.
A federally funded study released in December suggested that adding large new customers can lower prices if excess generation exists — but without new supply, competition for power could intensify.
The New Era: AI Must Build Its Own Backbone
The administration’s message to Silicon Valley is clear: the age of limitless grid access is over.
If artificial intelligence is to reshape the global economy, it will also have to reshape how it is powered — by financing its own energy, constructing its own generation, and proving that technological expansion doesn’t come at the public’s expense.
“You’re going to see some good things happen over the next couple of years,” Trump said.
Whether that promise translates into cheaper electricity or simply a new kind of tech-driven energy race may determine how smoothly America’s AI future unfolds.