How the U.S.-China Race Could Impact Energy, Water, and Consumers
As the United States and China deepen their competition for global leadership in artificial intelligence, a less visible battle is beginning to raise concerns among regulators, state governments, and local communities: the enormous energy and environmental costs required to power the data centers that support the next generation of AI systems.
The recent decision by the Federal Energy Regulatory Commission (FERC), backed by Energy Secretary Chris Wright and the administration of President Donald Trump, seeks to accelerate the connection of large data centers to the national power grid. The objective is clear: to prevent the United States from losing ground to China in what has become known as the “Artificial Intelligence Cold War.”
Behind this technological race are giants such as OpenAI, Google, Microsoft, Meta, Amazon, Oracle, and xAI, companies that require ever-increasing amounts of electricity to train and operate increasingly sophisticated AI models. According to estimates from the Electric Power Research Institute (EPRI), data centers already consume approximately 5 percent of all electricity generated in the United States, and that demand could triple by 2035.
However, the nation’s energy infrastructure is not expanding at the same pace. Industry experts warn that the electrical grid faces significant limitations in absorbing the thousands of additional megawatts required by the AI industry. In states such as Virginia, home to the world’s largest concentration of data centers, these facilities already account for more than a quarter of total statewide electricity demand.
FERC Chair Laura Swett has acknowledged concerns about the impact these new connections could have on consumers’ electricity bills. Although the commission has ruled that data center operators must bear the costs of the infrastructure upgrades required for their grid connections, questions remain about who will ultimately pay for the additional investments needed to strengthen transmission networks, build new power lines, and develop power generation facilities capable of meeting such demand.
Major U.S. utilities and grid operators, including PJM Interconnection, Dominion Energy, Duke Energy, Southern Company, and other regional providers, are facing growing pressure to ensure adequate electricity supplies without passing excessive costs on to households and businesses.
Yet the challenge extends beyond energy alone. Data centers also require massive cooling systems to prevent servers from overheating. These facilities consume millions of gallons of water each year, particularly in regions where evaporative cooling technologies are used. Environmental organizations warn that the large-scale expansion of these complexes could place additional strain on aquifers and water reserves, especially in areas already experiencing recurring drought conditions.
