U.S. states struggle to meet clean-energy targets as data centers drive electricity demand

Electricity demand from artificial intelligence data centers is increasing power use across the United States, raising the risk that some states will miss clean-energy targets as utilities consider using more fossil fuels to meet surging load.

Load pressure from data centers

In Nevada, the state’s largest electric utility, NV Energy, says it would need electricity three times current levels to operate Las Vegas solely to serve proposed data centers, a scale that may not be achievable without fossil fuels. That outcome could undermine Nevada’s goal of generating 50% of electricity from renewables by 2030.

“I don’t recall a time in the history of the industry when demand growth as strong as today has appeared, driven mainly by data centers,” said Shawn Elicegui, Senior Vice President of Resource Planning and Regulation at NV Energy, which serves about 90% of the state.

Nevada is among several states facing the challenge of meeting rapidly rising power demand from AI-linked data centers while trying to keep long-term plans to retire fossil fuels and transition to renewable, zero-emission energy on track.

State policy shifts and clean-energy targets

In North Carolina, the dominant utility is adjusting its long-term plan by delaying coal plant retirements and adding natural gas plants. Lawmakers have scrapped an interim emissions-reduction target, prompting environmental groups to warn the state may not reach net-zero emissions by 2050.

NextEra Energy, which supplies power in more than a dozen states, has also abandoned its target of net-zero emissions by 2045, citing “demand for all forms of generation” in a recent company filing.

The Trump administration has encouraged states to rely on coal to meet demand from manufacturing and data centers. At the same time, tech companies are slowing their own climate goals to accommodate AI-driven electricity consumption.

“This is very alarming, and perhaps the biggest natural-resource issue of our era,” said Olivia Tanager, Director of the Toiyabe Chapter of the Sierra Club in Nevada.

Growth versus clean energy debates in Nevada

Nevada is one of the fastest-growing data-center markets in the U.S., supported by factors including no corporate income tax, cheap land, and tax incentives. Dozens of data centers and other projects are planned, while lawmakers consider tighter regulations and how to balance clean-energy goals with the economic benefits data centers bring.

Some data centers say they want to contribute to the clean-energy transition. The industry accounts for up to half of corporate clean-energy purchases in 2024, according to Dan Diorio, Data Center Coalition’s State Policy Vice President.

However, experts say the pace of renewable deployment remains too slow. They cite backlogs for natural-gas turbine orders and the time required to develop renewable-energy projects.

Example: Switch’s renewable-backed model

Switch’s data center south of the Las Vegas Strip spans almost a square mile and is described as the largest data center in Southern Nevada. Switch says it runs entirely on renewable energy, according to Jason Hoffman, Switch’s Chief Strategy Officer.

Unlike many other operators, Switch is licensed to build renewable-energy generation at utility scale. The company says it has built 1 gigawatt of solar and is expanding solar-farm capacity. Switch uses NV Energy’s grid for transmission, while the power is purchased from third-party suppliers.

Switch’s facilities include hundreds of servers operating continuously in soundproof, water-resistant chambers. The company says its clients include major banks, streaming platforms, ecommerce sites, casinos, and government entities.

In hot summers, cooling demand rises. Switch can island from the grid and operate self-sufficiently, and the data center is designed to minimize cooling needs for much of the year.

Environmental and infrastructure concerns

Many electric utilities and tech companies are turning to natural gas to power data centers, including the XAI data center near Memphis, which uses mobile gas-turbine generators mounted on trucks.

Tanager said many Nevada data-center projects are planned to use hundreds of low-quality diesel generators for backup power, which could worsen air quality. She said these generators would be used only during outages.

During a seven-hour legislative session, Nevadans raised complaints about noise from data centers and concerns about water usage and electricity bills. Boulder City residents near Hoover Dam also opposed similar projects.

Funding mechanisms and accountability

NV Energy requires data-center developers to self-fund their power infrastructure, but there is no mandate requiring renewable energy. Nevada created a voluntary funding mechanism that allows companies to contribute to NV Energy’s clean-energy projects and count toward corporate-energy goals. The model, described as the first of its kind in the U.S., helped develop a geothermal plant in northern Nevada with Google’s participation.

Environmental groups want to make the model mandatory, but say it may not be sufficient to meet demand. They also worry NV Energy could become more dependent on fossil fuels without guarantees that all data-center projects will be built.

Elicegui said NV Energy will require companies to sign a pledge ensuring a project before building generation. He said NV Energy’s approach is to “welcome growth,” but businesses must assume responsibility for the load they create, “whether or not the project is implemented.”

The Nevada Public Utilities Commission could impose penalties or take other actions if NV Energy is found not to meet clean-energy targets. The company plans to publish a more detailed report later this month.

Lawmakers weigh costs and clean-energy risk

Democrat state Senator Howard Watts (Las Vegas) said projects that risk weakening Nevada’s renewable-energy portfolio are “unacceptable.” He wants data centers to bear the costs of clean-energy development, arguing that while many firms have already done so, formalizing policies is necessary.

“This seems to run counter to the direction the state needs to pursue,” he said, citing Nevada’s potential for solar and geothermal energy.

Impact and outlook

As policy pressures mount, the data-center boom creates a paradox: technologies expected to drive the future could slow the transition to clean energy. The article says redesigning policy mechanisms and allocating energy costs will be key to avoiding backsliding on climate commitments.