Sweating It Out: Data Centers Plus Summer Heat Raises Power Bills, Blackout Risk

In September 2022, as triple-digit outdoor temperatures baked large parts of California for days at a time, state officials begged residents to dial down their air conditioning use or risk breaking the electrical grid.

The plea worked. Power demand fell during peak hours and the state avoided widespread, potentially catastrophic rolling blackouts.

Almost exactly three months later, OpenAI launched the first version of ChatGPT. The artificial intelligence chatbot reached 100 million users within two months, making it the fastest-growing consumer app in history. You know what happened next: AI fever gripped Silicon Valley, then the world, kicking off the largest capital expenditure project this side of the 19th century’s railroad expansion as tech giants planted massive data centers to train and run AI models.

Back in 2022, the right to blast the AC pushed up against the limits of Immanuel Kant’s categorical imperative: If everyone does it, would the consequences be acceptable? This summer, Big Tech’s data center boom is going to throw a big wild card into the classic philosophical maxim.

To put it simply, electricity demand has surged in the past four years, while the supply of baseload power has utterly failed to keep pace, placing AC usage and the data center boom on a collision course.

“The grid cannot support both data center growth and summer peak demand at current capacity,” Dr. Mark McNees, director of social and sustainable enterprises at Florida State University, told The Daily Upside. “The math does not work without massive new buildout, and the question is who pays.

That’s without factoring in any potential downstream effects from the Iran War, which has been dubbed the largest energy crisis in history.

It’s Getting Hot in Here

Summer has already arrived in many parts of the US. Unseasonably high temperatures, including a record heat wave in southern California, resulted in the hottest March in the US in at least 132 years, according to federal weather data. In fact, the 12-month period through March 2026 was the hottest on record in the continental US, according to the National Oceanic and Atmospheric Administration. Meanwhile, East Coasters this week have flipped on air conditioners earlier than usual amid an unseasonable heat wave; Central Park just clocked its first 90-degree day on April 15 in records going back to 1869.

To no one’s surprise, it’s going to be a hot summer.

At this point, the only thing more predictable than record temperatures is the onslaught of AI-powering data centers. Some 3,000 are already in operation in the US, according to a recent Pew Research Center data analysis, with more than 1,500 currently in various stages of development.

Gridlocked

The buildout comes with a large bill. A Goldman Sachs report published in February 2025 found that global data center power demand will increase 50% from 2023 levels by 2027 and more than 165% by 2030.

In response, US utilities have committed to massive capital investments of their own, funneling $1.4 trillion into upgrading and expanding the grid in the next five years, according to a report published last week by non-profit consumer education group Powerlines. 

It’s an upgrade that couldn’t be more critical, and it probably won’t come fast enough.

“The grid was built for a demand profile that was flat for 20 years,” Arif Gasilov, partner at sustainability consulting firm Gasilov Group, told The Daily Upside. “Summer peak loads in the Sun Belt plus always-on data center baseload is a combination utility resource plans weren’t designed for, and the infrastructure to fix it is years behind the demand curve.”

Everything’s Bigger in Texas

Consider Texas. The Lone Star State has become a data center hotspot. It also suffers from sweltering summer heat. Texas might not be big enough for data centers and everyone’s air conditioners.

In a report published earlier this month, the Electric Reliability Council of Texas, the grid operator that serves most of the state, said peak demand could reach 367,790 megawatts by 2032, driven primarily by the massive uptick in data centers.

The current record peak demand? Just 85,500 megawatts of capacity, recorded during a blistering heat wave in the summer of 2023, which nearly stressed the grid to the point of exhaustion even as households were instructed to throttle their AC use during peak hours.

The infrastructure upgrades and the surge in demand are all but certain to add up to higher prices for consumers, especially as utility operators revive old and retired power-generation plants as a stopgap.

“It costs significantly more to run those older plants than modern ones,” Eliot Vancil, CEO of Fuel Logic, told The Daily Upside. “Homeowners will feel the effects of such operational stress on their seasonal rate adjustments.”

A study published by the Federal Reserve Bank of Dallas estimates that wholesale power prices could rise as much as 20% or even 50% in the coming years.

Trickle-Down Inflation: In the meantime, there might be more headaches, thanks to the war in Iran, though whether energy shocks will extend beyond diesel gas prices to household electricity prices remains an open question. In addition to oil, the conflict has significantly disrupted flows of liquefied natural gas around the globe. Around 40% of the US grid is powered by natural gas, and experts said that LNG’s robust domestic production capacity could insulate US households from near-term price shocks.

Still, American firms are quickly increasing their export capacity as the rest of the world seeks new energy sources. 

“When the US is exporting liquid natural gas, it removes that product from our domestic markets, resulting in a higher base cost for utilities to sell power to local residents,” Vancil said, adding that the increased cost of oil adds to the cost of shipping and distributing LNG as well, which will probably get passed down to US households. 

Along the same lines, higher baseload power costs around the world, and particularly in Asia, could lead to higher prices of imported goods for US consumers. In other words, get ready to burn more of your budget on staying cool, whether you’re relying on your air conditioner, trendy new merch or both.