A recent winter storm, impacting 34 states, has underscored the growing pressure on aging US power grids—a pressure intensified by the rapid expansion of energy-intensive artificial intelligence (AI) data centers. Hundreds of thousands of customers experienced outages, while wholesale electricity prices spiked dramatically in states like Virginia, where data center concentration is highest.
Rising Energy Costs and Grid Vulnerabilities
The surge in energy demand driven by AI, domestic manufacturing, and electrification of homes is outpacing infrastructure upgrades. This leaves power grids, some nearly a century old, increasingly vulnerable to extreme weather events. The storm exposed how limited the ability is for utilities to provide aid to each other when widespread emergencies occur.
“So many of them are caught in exactly the same trouble that you can’t get necessarily help from your neighbors,” says George Gross, a professor emeritus of electrical and computer engineering at the University of Illinois.
Price Volatility and Emergency Measures
Wholesale electricity prices in Virginia climbed above $1,800 on Sunday, compared to around $200 the previous day, illustrating the volatility. The Department of Energy issued emergency orders authorizing grid operators to deploy backup generators at data centers and other facilities, though the practical implications and federal authority remain unclear.
Long-Term Implications
The storm highlighted broader systemic challenges: aging infrastructure, increasing demand, and climate-related disasters. The situation raises questions about whether high prices will incentivize AI companies to voluntarily curb energy consumption during peak demand—a step unlikely given current market incentives.
“Right now, there’s just so much hype. They almost don’t care what the price of electricity is, that’s de minimis when it comes to their generating of AI value.”
The incident serves as a wake-up call. The US must address its power grid vulnerabilities or risk more severe outages as demand rises and extreme weather becomes more frequent.
