Over half of Americans are strongly opposed to a data center being built near their home, and over half also blame rising electricity prices on their construction and use. IER has shown that the relationship between data centers and electricity price increases is statistically insignificant, but a campaign first detailed in The Guardian in December of 2025, along with related media hype, has Americans on edge about data center buildouts and their contribution to electricity prices. Data center usage, however, can actually result in lower electricity prices as those prices are spread over more consumers—in this case, the additional consumers are data centers. That can occur if there is excess generating capacity at the utility or if new generating capacity is built when the data center is built.
That has not stopped policymakers from either wanting to ban data center construction or having developers build their own generating capacity next to their plant. Senator Bernie Sanders has sponsored a bill imposing a nationwide “moratorium” on data center construction, and New York lawmakers have passed a year-long moratorium on data center construction in the state. Some states, such as North Carolina, are considering ways to tighten restrictions on data center development. But restricting data center development kills jobs, loses revenue for communities, and decreases economic activity, as well as lowering the U.S.’s ability to compete with China.
Most data centers are currently powered by the electric grid, but some lawmakers want them to build their own on-site generating capacity that is not tied to the grid. Many projects plan to do so, thereby avoiding delays in obtaining permission to connect to the grid. A few states have passed laws to encourage off-grid data centers by loosening restrictions around who can build power plants and where. Senator Tom Cotton introduced the Decentralized Access to Technology Alternatives (DATA) Act of 2026, which would exempt off-grid data centers from federal regulations, making the entire process faster and cheaper.
Data Centers Need Reliable Power
Data centers need reliable power generation capacity that can supply power 24/7, as they run around the clock. In the short term, the fuel of choice tends to be natural gas. Other possibilities include restarting shuttered nuclear plants, building small nuclear reactors, and backing fusion energy. Microsoft, for example, is recommissioning the Three Mile Island nuclear plant in Pennsylvania to generate 835 megawatts of energy for its data centers, with the plant expected to be operational in 2028.
In 2024, Musk’s xAI got a Memphis data center up and running in months, in part by powering the facility with dozens of portable gas generators. Meta is working with natural gas company Williams on a project called Socrates in New Albany, Ohio, that will install a pair of off-grid gas power plants, each covering 20 acres, which will be operational this year. Ohio has implemented a policy framework called “consumer-regulated energy” that allows owners of data centers and other major industrial facilities to purchase power from third-party providers rather than the centralized grid. Oracle and OpenAI are also developing off-grid power plants for their data centers, with construction underway at their Stargate Project Jupiter campus in New Mexico, which will be powered by natural gas.
It is important to note that even if wind and solar energy were reliable and could operate 24/7, which they cannot, their deployment would require thousands of acres, as more capacity is needed to obtain the same amount of power as fossil fuel units or nuclear reactors. To enhance reliability, expensive storage batteries would be required, increasing land use and costs. Often, that amount of land is not available, making wind and solar unlikely choices.
Continuing to connect to the grid would require new transmission infrastructure and additional generating capacity, which would take too long for the rapid construction of these data centers. Building a new transmission line in the United States now takes about 10 years, while generation projects are held up in interconnection queues, with more than 2,600 gigawatts of capacity now in queues nationwide. Another option is for power companies to build substations serving just a single data center or a series of centers, without affecting the overall power grid.
Conclusion
Media hype driven by a campaign has more than half of Americans strongly opposed to data centers being built near their homes, and almost as many Americans are blaming rising electricity prices on them. IER has shown that the relationship between data centers and rising electricity prices is statistically insignificant. While there are cases where electricity prices can be lowered through data center grid usage, as costs are spread across more consumers, most policymakers favor data center developers buying power from third parties or building their own power sources next to their data centers. Natural gas, which is reliable and abundant, is currently the fuel of choice, but small nuclear reactors and the restart of shuttered nuclear plants are also being considered. Most data centers do not have the land necessary for wind or solar power with battery backup to be considered.
