(Bloomberg) — The US president, Donald Trump, is advocating an emergency wholesale electricity auction that, according to his administration, would force tech companies to pay for the new energy they need to operate the enormous AI data centers being built in the country.
The truth is that Amazon.com Inc., Microsoft Corp., Alphabet Inc., Meta Platforms Inc., OpenAI and all the other major technology companies behind the AI data center boom are more than willing to spend resources to expand electricity generation. And they have been doing so already.
“There is no shortage of money for them,” said Bloomberg Intelligence analyst Anurag Rana, regarding the tech giants fueling the global AI race. “They really don’t have a problem financing this.” Amazon, Microsoft, Alphabet and Meta spend, together, hundreds of billions of dollars per year on capital investments, well above the budgets of the entire utilities sector.
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In fact, data center developers had already been saying that they prefer to buy energy directly from the country’s power grids, rather than sign contracts directly with generators. This is because grid tariffs can be cheaper, grids have backup resources and these systems help stabilize supply during extreme weather events. Hyperscalers (or large-scale cloud providers) have also been signing contracts to restart nuclear plants or build new ones.
One way or another, the reality is that tech companies have been trying to secure energy from every possible source — both connected to grids and off-grid — as the energy demand for data centers is expected to triple by 2035.
“We agree that data centers should pay their own bills,” a Google spokesperson told Bloomberg. “For us, that’s basic.” Amazon’s chief lawyer, David Zapolsky, also praised Trump’s plan in a LinkedIn post, describing it as a way to address the “challenges of an aging electricity grid in America.”
In defending the auction, Trump may be solving a public relations problem for tech companies, according to analysts.
The sector and its energy suppliers have been criticized for rising electricity bills and the potential environmental impacts of new plants. An auction like the one proposed by Trump would allow these companies to bypass political resistance to individual projects.
“This could be a faster way to simply tackle the problem, rather than dealing with all that resistance and the issues associated with it,” said Paul Patterson, a utilities analyst at Glenrock Associates LLC.
Under Trump’s plan, the PJM Interconnection LLC grid operator will conduct an auction in which technology companies will bid for 15-year contracts for new generation capacity. This type of contract is exactly what data center developers seek, offering “more stability, more certainty and more predictability about what the price will be,” Patterson said.
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