(Jan 14): Microsoft Corp pledged to pay for the costs of building and using the electric-grid infrastructure required by its data centres, an attempt to head off customer anger that the energy-hungry facilities are driving up their power bills.
The company plans to collaborate with utilities to identify the electricity it requires, make data centres more efficient and reduce the amount of water the facilities use, president Brad Smith said in a blog post on Tuesday. Still, it’s unclear how Microsoft will achieve its goals.
“Our data centre won’t lead to an increase in your electricity prices if you are a neighbour in the community,” Smith said at an event in Washington. “We cannot protect against all sources of inflation, but we can definitely ensure that our data centre, the one that we build and own and operate, doesn’t lead to a price increase that you will see in your electricity bill.”
Smith also told reporters that Microsoft is viewing local tax incentives as “not a useful step”, and, during the event, committed to ensuring communities with Microsoft data centres see an increase in their tax base. The company continues to weigh state and federal incentives, Smith said.
While the Trump administration has championed data centres in the country’s artificial intelligence (AI) race with China, surging utility bills linked in part to this rapid buildout now threatens the Republican majority in Congress. It has also vexed operators and regulators of US power grids: They must sort how to divvy up this expense and still ensure reliable — and sufficient — electricity.
US President Donald Trump said on Monday that his administration had been in talks with Microsoft to ensure that consumers “don’t pick up the tab” for enormous data centres. In a Truth Social post, he added that while data centres “are key” to the AI boom, the “big technology companies who build them must ‘pay their own way’.”
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Analysts questioned how Microsoft, utilities and regulators would calculate the costs the tech firm’s data centres heap onto the power grid, given the difficulty of apportioning out which customers benefit most from something like new interstate transmission lines.
“It’s not cut and dried what the costs are that are being incurred on the part of the data centre,” said Paul Patterson, a utility analyst at Glenrock Associates. “It’s not as simple as plugging it into the wall and saying it’s the cost of the extension cord.”
One example is the expense of upgrades to regional transmission lines, which under long-standing practice have been spread out among the large customer base of homes and small businesses.
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“We are now in a world where it’s recognised that those broader grid upgrades are caused by large load development, so it’s clear that those upgrades are part of the cost that Microsoft is signing up for,” said Ben Hertz-Shargel of energy consultancy Wood Mackenzie Ltd.
Power bills are increasing across the US, and in some regions data centres have contributed to the rise. A Bloomberg News analysis last year found that wholesale electricity now costs as much as 267% more for a single month than it did five years ago in areas located near significant data centre activity.
Electric utilities have instituted new payment structures to protect homes and small businesses from paying for the cost of connecting enormous data centres to the power grid. Examples include requiring tech firms to pay for new infrastructure and to sign long-term contracts with minimum payments even if data centres use less electricity in the future.
Customer anger over rising power bills has already become a factor in political races, with Democrats campaigning on a promise to lower utility bills sweeping key elections in New Jersey, Virginia and Georgia late last year. Analysts predict the issue will be central in the US midterm elections later this year.
Uploaded by Tham Yek Lee
