Trump Proposes Tech Firms Fund Power Plants to Meet AI Energy Demand, Impacting Sector Costs

Imagine if your neighborhood suddenly had a lot more people plugging in powerful computers all day and night—like a new arcade opening on every block. That’s what’s happening to our power grid, and it could change what you pay for electricity.

What’s Happening With the Power Grid?

The U.S. government wants big tech companies—like those running massive data centers for artificial intelligence—to help pay for new power plants. This is because these data centers use a ton of electricity, and that’s making prices go up for everyone else.

The PJM Interconnection is the biggest electricity grid in the country. It covers 13 states and Washington, D.C., and serves more than 65 million people. Northern Virginia, which is part of this grid, is now the world’s largest home for data centers.

Why Does This Matter for Investors?

Rising electricity prices affect everyone, but especially investors. Higher energy costs can eat into the profits of companies that use a lot of power. Sectors like tech, utilities, and manufacturing could see their costs rise. At the same time, companies making or supporting clean energy and efficient power solutions might benefit.

According to the International Energy Agency, global data center electricity use could double by 2026, putting even more pressure on grids and prices.

Bulls: Why Some Think This Is Good

• Shares the load: Making tech companies pay for new power plants means regular people might not have to cover the whole bill.
• Supports growth: Building new power plants could create jobs and boost the economy in certain regions.
• Pushes innovation: High demand might encourage investment in cleaner, more efficient energy sources.
• Reduces blackout risk: More power means a lower chance of blackouts, which can be costly for businesses and families.

Bears: Why Some Worry

• Costs get passed on: Tech companies might just raise their prices, so consumers could end up paying more anyway.
• Uncertain results: Emergency auctions and new rules could create confusion and make it harder for companies to plan.
• Political risk: Policy changes can swing quickly with elections, making long-term investments riskier.
• Grid strain remains: Even with new plants, growing demand could still outpace supply, increasing the risk of outages.

What’s the Bigger Picture?

Electricity use from data centers is exploding. Watchdog group Monitoring Analytics says data centers have driven $23 billion in new costs on the PJM grid alone, with those costs mostly passed on to regular people. In fact, PJM recently found it was six gigawatts short of what’s needed for reliability in 2027. That’s about as much power as six large nuclear plants produce.

Historically, when energy costs jump quickly, it can hurt consumer spending and slow down the economy. For example, after the 1970s oil crisis, high energy prices led to a recession and big changes in how companies and families used power.

Investor Takeaway

• Watch energy-intensive sectors: Companies running large data centers or factories may see profit pressure if energy costs keep rising.
• Look for grid and clean energy plays: Firms building new power plants or improving energy efficiency could benefit from this big shift.
• Stay alert to policy shifts: Political changes can quickly reshape who pays for energy and how, so keep an eye on new regulations.
• Consider diversification: Spreading investments across sectors can help manage risk from rising energy prices.
• Think long-term: The push for reliable, affordable electricity is likely to drive investment for years to come, especially as AI and tech keep growing.

For the full original report, see CNBC