Off-Grid Data Centers Will Help Protect Ratepayers, But Codifying ARC-ES Would Do Even More

By Gary Abernathy

This article was originally published at The Empowerment Alliance and is re-published here with permission. 

Between the war in Iran, the controversies involving the Immigration and Customs Enforcement agency and other developing national and world events, a pledge made in early August by our biggest AI companies did not get the attention it deserved.

In communities big and small across the U.S., emerging data centers have been a source of controversy.

“Grassroots resistance to data centers rises in Pennsylvania.”
“Residents protest data centers outside Michigan capitol as debates rage on.”
“Texans demand special legislative session for data center debate.”

The headlines keep coming. As NPR reported, “The large-scale facilities are necessary to match the electricity demand required for AI, but high energy costs come with them, angering residents.”

In reality, the relation of new data centers to higher electric costs in the communities in which they are built are more complicated than the notion of a simple direct correlation. But it is beyond dispute that data centers need a huge amount of electricity and an endless supply of water to cool the facilities.

The Trump administration reacted to those concerns by taking the first step in ensuring that AI companies acknowledge the issue and do their part to mitigate the impact, a move Trump mentioned during his February State of the Union address and finalized a few days later.

“Amazon, Google, Meta, Microsoft, OpenAI, Oracle, and xAI signed the Ratepayer Protection Pledge,” the White House announced on March 4, a pledge that means the companies agreed to “build, bring, or buy new generation resources and cover the cost of all power delivery infrastructure upgrades required for their data centers, ensuring such expenses are not passed to American households.”

In accordance with the plan, “…these companies will negotiate separate rate structures with utilities and State governments, and commit to pay these rates for the power and related infrastructure  brought online to service their data centers, whether they use the electricity or not.”

“We’re telling the major tech companies that they have the obligation to provide for their own power needs,” Trump said in his State of the Union remarks. “We have an old grid. It could never handle the kind of numbers, the amount of electricity that’s needed. So I’m telling them, they can build their own plant. They’re going to produce their own electricity. It will ensure the company’s ability to get electricity, while at the same time, lowering prices of electricity for you.”

While many data center operators did not originally intend to build their own off-grid gas plants, the reality of their needs are leading an increasing number of them to change their minds.

“Power plants have bloomed in New Albany, Ohio, near Columbus, as if overnight,” the New York Times recently reported. “It was little more than a year ago that Sloan Spalding, the mayor, learned that a data center developer wanted to build the town’s first gas-fired power plant. Now, three are under construction, all meant to exclusively power data centers, and at least one other is planned.”

Plants like those “will not affect the price of electricity for Ohio residents because the facilities are not connected to the grid,” the Times reported. The same is true elsewhere. And once again, natural gas is king.

“Companies are gravitating to gas because it can theoretically generate electricity all day, unlike the wind or sun. And smaller gas generators and engines can be installed much faster than nuclear power plants,” the Times noted.

The only downside is that the pledge made by the data center companies is for now voluntary, with little enforcement outside deals negotiated with state regulators.

That’s why it’s more important than ever to codify the Affordable, Reliable, Clean Energy Security Act (ARC-ES), introduced in Congress late last year by Rep. Troy Balderson (R-OH). ARC-ES “would require relevant federal agencies — such as the Department of Energy, Department of the Interior, and the Environmental Protection Agency — to review any actions relating to affordable, reliable, or clean energy within 90 days and submit a report to Congress. The bill guarantees that our most affordable and reliable energy sources, including nuclear and natural gas, remain part of the energy mix – a crucial requirement to guarantee affordable and reliable energy for American households and businesses.”

Regardless of any controversies surrounding artificial intelligence and the data centers needed to generate the growing demand, what everyone should agree on is the importance of the U.S. being the world leader in the AI boom. Allowing China or other countries to control AI technology would spell disaster for Americans and other freedom-loving nations.

Natural gas will be the leading source of electricity generation for decades to come. Protecting its production beyond President Trump’s term should be the highest priority for the president and for lawmakers who want to ensure America’s place as the world leader in technology.

With America’s 250th birthday right around the corner on July 4, it doesn’t require artificial intelligence to know that the biggest gift of all would be a guarantee of energy security and independence for ourselves, our children and generations to come.

Gary Abernathy is a longtime newspaper editor, reporter and columnist. He was a contributing columnist for the Washington Post from 2017-2023 and a frequent guest analyst across numerous media platforms. He is a contributing opinion columnist for The Empowerment Alliance, which advocates for realistic approaches to energy consumption and environmental conservation.

This article was originally published by RealClearEnergy and made available via RealClearWire.