New data centers could strain the grid — and your wallet

The promise was striking: 500 jobs, $6.4 billion in investment and millions in new tax revenue for a rural North Carolina community.

But when the Tarboro Town Council took up the proposal for a 50-acre data center in September, residents packed the chambers to voice fears about water use, noise and the project’s long-term sustainability.

In the end, the council voted to reject the plan, siding with opponents who argued the costs outweighed the benefits.

The clash in Tarboro is part of a broader debate now unfolding across North Carolina. Data centers are multiplying to power artificial intelligence and cloud computing, raising questions not just about local impacts but about who ultimately pays the soaring electricity costs needed to support them.

“Anytime there’s an increase in demand, eventually there will be an increase in price,” said Harrison Fell, a professor of agricultural and resource economics at North Carolina State University. “The question is whose prices go up. Some of that could fall on consumers.”

A shift in who pays

That prospect became more likely with the passage of Senate Bill 266, the Power Bill Reduction Act. Enacted in July over Gov. Josh Stein’s veto, the measure reshapes how Duke Energy and other utilities allocate costs.

Under the new formula, large commercial and industrial customers, including data centers, will pay less toward “purchased power” and fuel costs, while households will pay more. Analyses by EQ Research found the shift could move millions of dollars a year from industry to residential customers.

“The concern is valid,” said John Gajda, a professor of the practice in electrical and computer engineering at NC State. “If the power system has to adapt and we have to construct new transmission lines or new power plants, where will that money come from? Traditionally, it comes from all electricity users. The hope is that whoever causes the cost pays for it, but that’s not always how it works out.”

Power demand the size of a city

The scale of these facilities is staggering. A single 300-megawatt data center, like the one proposed in Tarboro, would use as much electricity as about 30,000 homes, according to Gajda.

“Some of these data centers are as large as our biggest power plants,” he said. “That’s unprecedented. We’ve had large factories before, like a steel mill, but not dozens of them coming at once.”

Another project, the New Hill Digital Campus near Apex, would spread across 190 acres not far from the Harris Nuclear Plant. There, residents have rallied against rezoning, citing worries about noise, light pollution, traffic and strains on water and power.

“It’s too much,” said Jordan Pointe resident Jordan Macaione at a recent council meeting. “This neighborhood has already seen so much growth. I’m not sure this area can handle the added strain.”

Uncertainty and risk

Alexandra Klass, a law professor at the University of Michigan, said the uncertainty surrounding these projects is part of the problem.

“Some of these facilities are asking for connections larger than entire cities, but we don’t know which ones will actually get built or how much power they’ll really use,” she said. “That creates a risk that utilities overbuild — investing in expensive fossil fuel plants to serve demand that doesn’t materialize. If that happens, existing customers end up paying for it.”

Communities also face immediate impacts. “There are local concerns about truck traffic, industrialization of areas that haven’t been industrial before, and water for cooling,” Klass said. “But the biggest challenge is how to generate the power. Do we build out clean energy like nuclear, solar and wind, or do we lean more on gas plants and keep coal plants running longer?”

An alternative approach

Klass and colleague Dave Owen with UC Law San Francisco have proposed a different framework: creating a separate customer class for data centers. Utilities already have distinct categories for residential, commercial and industrial customers. Extending that idea, regulators could require data centers to operate more flexibly.

“One option is that during times of peak demand, data centers could be curtailed, and that expectation would be set in advance,” Klass said. “That gives them an incentive to innovate — to become more efficient, to build their own carbon-free resources, or to negotiate for capacity in ways that don’t put all the burden on households.”

She pointed to Western water law and natural gas markets as models that spurred innovation. “Oftentimes scarcity can really promote efficiency,” she said. “These are some of the wealthiest, most sophisticated companies in the world. They’re in a good position to adapt.”

Climate at the crossroads

The emissions impact depends on what new resources utilities bring online.

“If the only resources we can bring on quickly are fossil-fuel plants, then there’s reason for concern,” Gajda said. “If we can build solar faster, maybe emissions won’t rise. But solar doesn’t run at night, and gas does. It really depends on the portfolio of resources available.”

Fell added that the surge in electricity demand, projected nationally to grow 25% by 2030, comes at a delicate moment. “We’ve just extended deadlines for coal plant retirements in North Carolina,” he said. “If rising demand locks in more fossil fuel use, that puts climate goals further out of reach.”

Klass said the boom could still be a “positive disruption” if companies stick to clean-energy commitments. “If they drive investment in wind, solar, transmission and storage, that benefits the whole grid,” she said. “But if it locks us into expensive gas plants for decades, that’s disruption in the worst way — bad for the climate and bad for customers.”

Jobs, revenue and bills

For communities like Tarboro and Apex, the calculus remains complicated.

“These projects bring jobs and local tax revenue,” Gajda said. “More load also generates more revenue for utilities, which can sometimes put downward pressure on rates by making more efficient use of the system. But there’s no all-good-news or all-bad-news story here. It’s a balance.”

Residents like Vinson Bridgers, who grew up in Tarboro, remain skeptical. “I don’t think the incentives to bring this center here are a good move because of the water consumption,” he said.

As North Carolina positions itself as a hub for artificial intelligence infrastructure, the question is whether the benefits outweigh the costs.

“Ultimately it comes down to fairness,” Fell said. “How do we share these costs in a way that doesn’t leave everyday households paying more so global tech companies can expand?”