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This Week's Trend In Brief:

• By now, it is well known that the rapid growth of AI-driven data centers is also fueling record demand for power, land, and water. But what gets less notice is how that growth is sparking a wave of concern – if not outright resistance – from regulators, communities, utilities, and environmental advocates alike.

   

• In a recent column for Utility Dive, Delve CEO Jeff Berkowitz and leading energy public affairs advisor Joe Brettell explained how this data center expansion is colliding with grid capacity limits, strained infrastructure, and mounting scrutiny from regulators, communities, and environmental groups.

   

• The scale of power required to support AI, measured in the energy needs of mid-sized cities, is forcing utilities and tech companies into uncomfortable conversations about who gets priority access to energy, at what cost, and from which sources.

   

• Despite heavy investment and state-level support, skepticism is growing over whether data centers deliver enough economic benefit to justify the incentives and infrastructure investment they require, especially in the rural communities bearing the development burden.

   

• If the energy and tech sectors are to meet the moment, they and the public affairs professionals that represent them must be prepared to navigate a multi-front pushback from regulators, communities, and activists – or risk falling behind the very future they’re trying to build.

Digging Deeper:

 
We all know the AI boom is reshaping the energy infrastructure landscape, but less noticed is how that rapid expansion is triggering a new wave of concern, if not outright resistance, from regulators, utilities, communities, and environmental advocates. For years, states have aggressively courted data centers with tax incentives and infrastructure support, betting on high-tech jobs and long-term economic investment. But now, with AI pushing energy demands to unprecedented levels and reshaping land and water use, the once-symbiotic relationship between tech firms, energy providers, and government stakeholders is showing signs of strain. What began as a cooperative push for innovation is increasingly defined by grid pressure, permitting fights, and mounting public scrutiny. To build the energy future that AI demands, public affairs professionals and the companies they represent must anticipate this pushback or risk falling behind the curve.

In a recent column for Utility Dive, Delve CEO Jeff Berkowitz and leading energy public affairs advisor Joe Brettell explained how this data center expansion is colliding with grid capacity limits, strained infrastructure, and mounting scrutiny from stakeholders. As Berkowitz and Brettell noted, the rapid growth of AI-driven data centers is fueling record demand for land and water, and that demand has sparked a wave of resistance from regulators, communities, utilities, and environmental advocates alike. While the proliferation of data centers was already raising questions about the amount of energy needed, these concerns have only amplified in recent months as communities across the country grapple with the physical footprint of massive new facilities and the environmental tradeoffs they bring. Water-intensive cooling systems are prompting new scrutiny in drought-prone states like Arizona and California, while permitting fights over transmission lines and generation sources are already underway. As Berkowitz and Brettell explain in Utility Dive, public support for innovation can quickly erode when local residents feel excluded or overwhelmed by the scale of what is being built in their backyard.

At the same time, the scale of power required to support AI, measured in the energy needs of mid-sized cities, is forcing utilities and tech companies into uncomfortable conversations about who gets priority access to energy and at what cost. The scale of energy needed to power AI is staggering, with the technology already using “as much energy as a small country” in 2024. The related data centers needed to power AI can consume more electricity than entire cities in areas where that energy may not be readily available. That reality is forcing tech companies and utilities into uncomfortable but necessary conversations about energy prioritization and ratepayer fairness. In states like Virginia, Utah, and Illinois, utilities are sounding the alarm about grid reliability, while regulators weigh how to approve large new loads without compromising service to households or other businesses. While this debate unfolds, tech companies need to move fast, and often faster than regulators and infrastructure can keep up. Even when they do keep up, it may not be an easy path. Take Entergy’s $10 billion deal to power a new Meta AI data center in Louisiana. The deal has drawn swift backlash and lawsuits from environmental groups, even as the state’s governor, utility regulators, and tech partners appear aligned in support of the project.

Indeed, despite heavy investment and state-level support, skepticism is growing over whether data centers deliver enough economic benefit to justify the incentives and infrastructure investment they require, especially in the rural communities bearing the development burden. Many local leaders are questioning whether data centers deliver the economic benefits they promise. In rural areas especially, projects often bring few long-term jobs relative to the scale of infrastructure and incentive packages required to support them, while environmental groups sound the alarm about potential threats to local ecosystems. Lawmakers in states like Georgia and Indiana are rethinking their incentive frameworks, and watchdog groups are increasingly focused on the return taxpayers see from these deals. As Berkowitz and Brettell note in Utility Dive, success will depend on articulating a broader, more compelling value proposition for energy and tech companies alike. Building the energy future AI requires will depend on how effectively public affairs professionals anticipate and respond to rising political and public pressure and challenges.

For the energy and tech sectors to meet the moment, they and the public affairs professionals that represent them must be prepared to navigate a multi-front pushback from regulators, communities, and activists – not to mention competing interests between their industries. That means mapping emerging risk early, engaging communities before opposition calcifies, and coordinating across sectors to align demand forecasts with infrastructure realities. The future of AI is being built right now, but unless stakeholders move not just fast, but strategically, they risk falling behind the very transformation they are working to power. To help them navigate these pressures without slowing down the rapid expansion of critical new technologies, public affairs professionals and the companies they represent need a proven playbook to not only keep pace with the developments but stay two steps ahead of the challenges they may present.

Read the full Utility Dive column by Delve CEO Jeff Berkowitz and leading energy public affairs advisor Joe Brettell here.

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.

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