{"id":2332,"date":"2026-09-04T09:40:00","date_gmt":"2026-09-04T09:40:00","guid":{"rendered":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/2026\/09\/04\/2026-09-04-data-centers-not-the-problem\/"},"modified":"2026-10-06T23:10:17","modified_gmt":"2026-10-06T23:10:17","slug":"2026-09-04-data-centers-not-the-problem","status":"publish","type":"post","link":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/2026\/09\/04\/2026-09-04-data-centers-not-the-problem\/","title":{"rendered":"Data centers not the\u00a0problem"},"content":{"rendered":"\n

By Brae Sadler<\/a> · Staff Writer<\/p>\n\n\n\n

\"A
A data center is shown. \u2014 SIEMENS<\/em><\/figcaption><\/figure>\n\n\n\n

If you are like most Americans, you do not like data centers. According to a May Gallup poll, 70% of Americans oppose data center construction in their communities. That makes data centers more unpopular than nuclear power plants.<\/p>\n\n\n\n

Why do Americans oppose data centers? The most cited reason is resource use, especially water and electricity. People believe that building data centers threatens resource sustainability by increasing consumption and prices.<\/p>\n\n\n\n

This fear is not unfounded; data center construction can result in higher utility prices. However, this problem is not inherent to data centers; rising prices are the result of government policy. Energy markets in the United States are highly regulated, and these regulations support monopolies incentivized to raise prices.<\/p>\n\n\n\n

Data centers are a net positive for society. We can promote data center growth while keeping energy prices down.<\/p>\n\n\n\n

Data centers generate tangible value that is improving all our lives. First, data centers are powering artificial intelligence (AI), and AI is already making the world a better place. For example, a July study from the Mercatus Center found early evidence that AI is driving the creation of independent businesses.<\/p>\n\n\n\n

Second, AI is advancing other technologies. To lower costs, tech companies are investing in modular nuclear power plants, which are more environmentally friendly than fossil fuel plants. Lastly, data centers could help push humanity into space. One of SpaceX\u2019s stated goals is to build data centers in orbit.<\/p>\n\n\n\n

However, none of these benefits must come at the expense of your wallet. The reason prices are increasing is that market mechanisms are being hampered. In competitive markets, high prices signal profit opportunities to any business that can sell below others. This creates a \u201crace to the bottom\u201d in prices. Persistently high prices suggest something is preventing competition.<\/p>\n\n\n\n

The reason: monopolies. Most energy markets in the United States are monopolized. State public utility commissions grant regional monopolies to local utilities. Prices are not decreasing because competition is prohibited. Non-incumbent energy companies are never given the chance to undersell monopolists.<\/p>\n\n\n\n

State governments try to protect their citizens by setting a rate of return that an energy utility can earn. If the government can set the rate of return equal to a company\u2019s cost of capital \u2014 the lowest return a project can have for a company to invest \u2014 then there is no incentive for the utility to raise prices. The utility does not make more money by charging more. Unfortunately, that only works in theory.<\/p>\n\n\n\n

Policymakers are incentivized to set the guaranteed rate of return above the cost of capital. First, there is no objective way to measure the cost of capital. The idea that the government can calculate a rate of return equal to the cost of capital is a non sequitur. Second, policymakers want to avoid blackouts. Energy failures invite voters to kick out the people responsible. The government will avoid setting the rate of return too low and so tends to set it too high. Some monopoly predation is better than being fired for a policy-maker.<\/p>\n\n\n\n

High rates of return incentivize data center construction. A utility receives a high guaranteed rate of return on any investment it makes, and the hyperscale data centers used to power AI require large infrastructure investments. Energy companies are legally entitled to recoup those investments \u2014 by raising prices on all ratepayers. Monopoly power turns your money into subsidies for energy utilities. This phenomenon is not new; the economists Harvey Averch and Leland Johnson identified it in the 1960s. Guaranteed rates of return are old news.<\/p>\n\n\n\n

High energy prices are not inherent to data centers. They are the result of government-granted monopolies in the energy industry. If we want to tackle energy prices, we must decrease the monopoly power of utilities.<\/p>\n\n\n\n

The truth is that our grid is outdated, and the problems we are seeing today have existed for decades. Banning data centers to keep prices down is not a long-term solution. The only way to permanently resolve our energy price problems is to attack the root: government intervention.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you are like most Americans, you do not like data centers. According to a May Gallup poll, 70% of Americans oppose data center construction in their communities. That makes data centers<\/p>\n","protected":false},"author":12,"featured_media":2277,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","footnotes":""},"categories":[215],"tags":[64,16,162],"class_list":["post-2332","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinions","tag-brae-sadler","tag-editorial-perspectives","tag-issue-2026-09-04"],"uagb_featured_image_src":{"full":["\/wp-content\/uploads\/sites\/6\/2026\/09\/2026-09-04-20-data-centers-not-the-problem-1.jpg",430,257,false],"thumbnail":["\/wp-content\/uploads\/sites\/6\/2026\/09\/2026-09-04-20-data-centers-not-the-problem-1.jpg",150,90,false],"medium":["\/wp-content\/uploads\/sites\/6\/2026\/09\/2026-09-04-20-data-centers-not-the-problem-1.jpg",300,179,false],"medium_large":["\/wp-content\/uploads\/sites\/6\/2026\/09\/2026-09-04-20-data-centers-not-the-problem-1.jpg",430,257,false],"large":["\/wp-content\/uploads\/sites\/6\/2026\/09\/2026-09-04-20-data-centers-not-the-problem-1.jpg",430,257,false],"1536x1536":["\/wp-content\/uploads\/sites\/6\/2026\/09\/2026-09-04-20-data-centers-not-the-problem-1.jpg",430,257,false],"2048x2048":["\/wp-content\/uploads\/sites\/6\/2026\/09\/2026-09-04-20-data-centers-not-the-problem-1.jpg",430,257,false]},"uagb_author_info":{"display_name":"Ian Schartner","author_link":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/author\/schartnerij23\/"},"uagb_comment_info":0,"uagb_excerpt":"If you are like most Americans, you do not like data centers. According to a May Gallup poll, 70% of Americans oppose data center construction in their communities. That makes data centers","_links":{"self":[{"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/posts\/2332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/comments?post=2332"}],"version-history":[{"count":1,"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/posts\/2332\/revisions"}],"predecessor-version":[{"id":2611,"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/posts\/2332\/revisions\/2611"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/media\/2277"}],"wp:attachment":[{"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/media?parent=2332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/categories?post=2332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stuorgs2.gcc.edu\/thecollegian\/wp-json\/wp\/v2\/tags?post=2332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}