AI data centers are creating an unprecedented energy crisis that's forcing states to choose between climate goals and economic growth. Nevada's largest utility says it will need three times the electricity required to power Las Vegas just to handle proposed data centers, and it probably cannot do that without fossil fuels. This means the utility could miss Nevada's clean energy targets requiring 50% renewable power by 2030 .

Why Are Data Centers Consuming So Much Power?

The explosion in artificial intelligence demand has created an unprecedented surge in data center construction across the United States. These facilities house the servers and computing infrastructure needed to train and run AI models, which require enormous amounts of electricity to operate and keep cool. Nevada has become one of the fastest-growing data center markets in the US, thanks to its lack of corporate income tax, cheap land, and tax breaks for data centers .

"I can't remember a time in the history of the industry where we've seen as much interest in adding load, which is primarily driven by data centers," said Shawn Elicegui, senior vice president of regulatory and resource planning for NV Energy, which provides electricity to 90% of the state.

Shawn Elicegui, Senior Vice President of Regulatory and Resource Planning at NV Energy

The scale of this challenge extends far beyond Nevada. Utilities across the country are grappling with how to meet the exploding electricity demand for data centers to power artificial intelligence without sacrificing long-term plans to move away from fossil fuels in favor of renewable and zero-carbon sources .

How Are States Responding to the Energy Demand Crisis?

The response from utilities and state governments reveals a troubling pattern. In North Carolina, which is also seeing a surge of data centers, the largest utility is revising its long-term plans to delay the retirement of coal plants and to build more natural gas plants. Legislators removed an interim goal for utilities to cut carbon emissions, spurring concern from environmentalists that the state might miss its goal of zero carbon emissions by 2050 .

The situation is even more dramatic at the national level. NextEra Energy, which serves commercial electricity in over a dozen states, completely dropped its goal to reach zero emissions by 2045 due to the "demand for all forms of power generation," the company said in a recent business filing. Meanwhile, the Trump administration has encouraged states to use coal to meet the demands from manufacturing and data centers .

• Nevada's Challenge: The state's largest utility needs three times Las Vegas's power consumption just for proposed data centers, threatening the state's 50% renewable energy target by 2030.
• North Carolina's Retreat: The state is delaying coal plant retirements and building more natural gas plants while removing interim carbon emission reduction goals.
• National Backsliding: NextEra Energy abandoned its zero emissions goal by 2045, citing increased demand for all forms of power generation including fossil fuels.

What Solutions Are Tech Companies Proposing?

Some data centers are attempting to address the clean energy crisis by building their own renewable energy infrastructure. South of the Las Vegas Strip, the Switch data center stretches for nearly a square mile and runs entirely on renewable energy. Unlike other data centers, Switch is licensed to build its own sources of renewable energy at the scale of a utility company. It has built 1 gigawatt of solar energy and is in the process of building more solar fields .

"During the summer heat, when more energy is required to keep the equipment cool, Switch can remove itself from the grid and be self-sufficient," explained Jason Hoffman, chief strategy officer at Switch.

Jason Hoffman, Chief Strategy Officer at Switch

The data center industry has also highlighted its commitment to clean energy procurement. The industry was responsible for half of all corporate clean energy procurement in 2024, according to the Data Center Coalition. However, this progress is being outpaced by the sheer volume of new data centers coming online .

What Are the Barriers to Meeting Renewable Energy Demand?

Despite industry efforts, renewable energy's contribution to the power grid is not growing fast enough to keep pace with data center demand. Nationally, orders for gas turbines are backlogged and processing renewable energy projects takes considerable time, according to industry experts. This infrastructure lag means that even companies willing to invest in clean energy face delays in deployment .

Environmental groups are particularly concerned about the use of backup generators at data centers. Multiple proposed data centers in Northern Nevada would use hundreds of low-quality diesel-powered backup generators that will worsen air quality. While these generators are not used often, they represent a significant environmental risk .

Olivia Tanager, director of the Sierra Club's Toiyabe chapter covering Nevada, expressed alarm about the situation. "It's very alarming, and it's probably the single largest natural resource issue of our time," she stated, highlighting the scale of the challenge facing environmental advocates .

What Policy Solutions Are Being Considered?

Nevada has designed a volunteer funding model that allows companies to put up money for NV Energy's clean energy development and then count it toward their corporate energy goals. This was the first such model of its kind in the country and led to the development of a geothermal plant in Northern Nevada with Google as a partner. However, environmental groups want the state to make that model mandatory, and they still worry it would not bring enough clean energy to meet demand .

Democratic Assemblymember Howard Watts of Las Vegas has called for stronger guardrails. "Building more gas plants seems like going in the exact opposite direction of what we need to do as a state," he said, noting that Nevada has "tremendous solar and geothermal energy potential." Watts wants to see it required that data centers take on the costs of clean energy development, and he believes putting those guardrails in statute is necessary .

NV Energy will require companies to sign contracts ensuring their commitment to the state before energy is built. The utility's philosophy is that "growth is welcomed," but that companies need to be responsible for power load added on their behalf "whether they show up or not." The public utilities commission in Nevada may impose a fine, grant an exemption, or take some other action if it determines NV Energy failed to meet the state's clean energy goals .

The tension between economic opportunity and environmental responsibility has become the defining challenge of the AI era. As data centers continue to proliferate, states must decide whether to prioritize short-term economic gains or long-term climate commitments. The decisions made in Nevada, North Carolina, and other states will set precedents for how the nation balances the energy demands of artificial intelligence with its climate goals.