US President Donald Trump recently said that Microsoft will make “major changes” this week to ensure U.S. consumers do not pay more for electricity because of data centers’ power consumption, and his administration was working with other technology companies on the issue of high utility bills. Following this, Microsoft announced an initiative to build “community-first AI infrastructure” under which they will pay utility rates to ensure electricity prices don’t go up for residents, minimise water use, create jobs, enable upskilling, and pay property taxes without tax breaks. Tracing US’s strategy towards data centre development over the past year, these changes perhaps signal a future shift in their strategy.
Looking back, the 2025 executive order titled “Accelerating Federal Permitting of Data Center Infrastructure” declared a “national energy emergency” to expedite much of the environmental red tape for building data centres that have a power capacity higher than 100 MW, which are on the larger end of hyperscale data centres.
While previous policies focused heavily on wind and solar, the current administration shifted the priority toward dispatchable baseload power (natural gas, coal, and geothermal). The reasoning for this was simple: data centers require continuous and stable electricity that most renewable sources cannot yet provide at scale.
Bloomberg found that electricity near significant data centres now costs 267% more than it did 5 years ago. Moreover, carbon emissions from Big Tech companies like Microsoft have grown significantly since 2020 as a direct result of AI and AI-related developments. The massive price hike in electricity as well as impact on the environment highlight the pitfalls of an aggressive data centre development strategy without an adequate and sustainable power grid.
As India prepares for its own data centre market growth, the US experience offers a vital roadmap of what to avoid. By treating data centres as “strategic national assets” and prioritising natural gas and coal to ensure 24/7 stability, the US administration managed to build fast. However, they failed to account for the “grid tax” on the average consumer.
When a massive data centre plugs into a local grid, it doesn’t just consume energy. It requires grid upgrades and the increased demand takes time to meet, thereby leaving residents to pay more.
Since India is still at the beginning of its capacity curve, course correction is much easier. Moreover, India is also simultaneously increasing power generation capacity with a focus on renewables. Important next steps would be to incentivise clean power and meeting efficiency norms for data centres, and planning grid upgrades, renewables, and storage around data centre hubs so they become anchor customers for clean power instead of locking in more coal use.