Hoosiers might already be seeing the effects of AI data centers populating Indiana with increased electricity bills.
According to Citizens Action Coalition program director Ben Inskeep, new AI data centers are bringing utility companies like Duke Energy to pass subsidization costs onto consumers.
“This is not like some abstract issue that could come in the future,” Inskeep said. “It's here. It's now. It's already impacting bills.”
This is largely due to the passing of House Bill 1007. This bill gives a tax credit for small modular nuclear reactors in Indiana. According to the Idaho National Laboratory, SMRs generate between one-tenth and one-fourth of the energy that typical nuclear power reactors do. These reactors use nuclear fission reactions to create steam that powers a turbine, thus generating electricity.
“This bill allows utilities to start thinking about maybe one day building a small modular nuclear reactor and accruing hundreds of millions of dollars in costs,” Inskeep said. “It gives the utility the ability to pass those costs on the consumers.”
According to the Cleantech Group, SMRs can cost between $50 million and $3 billion.
In Indiana, the 20% tax credit for SMRs is meant to support the amount of power needed for AI data centers built by companies including Google, Amazon, Microsoft and Meta.
These data centers use “incomprehensibly large amounts” of electricity, Inskeep said, potentially more than an entire city.
“These things are massive energy guzzlers,” he said. “And when you have a facility that uses that much energy, you know that energy has to come from some source.”
While the data centers ultimately increase electricity costs, they can also come with a considerable environmental toll.
AI data centers require large amounts of water to serve as a cooling system for the servers. Google’s data centers, for example, used an average of 550,000 gallons of water each day in 2023.
Inskeep said it is extremely unlikely that clean energy sources alone can meet the immediate needs of AI data centers, meaning an increase in fossil fuel use.
“We need to control the amount of data center power demand that's coming onto our grid and make sure it's not overwhelming the system,” Inskeep said. “Instead of rushing to build more data centers, we need to slow down.”
Before closing coal or gas plants, HB 1007 states that companies must submit information to the state showing how the utilities plan to replace or maintain the power provided from the plant they close. The Indiana Utility Regulatory Commission may investigate whether or not the company is able to maintain their power output.
Along with this, utilities can begin construction of an SMR before it is fully approved and petition the IURC to adjust their rates and cover some of the costs from customers.
“The public utility may petition the IURC for the approval of a rate schedule that periodically adjusts the public utility's rates and charges to provide for the timely recovery of project development costs,” the bill’s digest states.
With more time, Inskeep said, Indiana could build more renewable energy and add energy efficiency solutions.
“This trend of data centers is going to completely eviscerate our progress when it comes to climate change,” Inskeep said.
Inskeep said these companies are looking at Indiana as the location for their data centers for a few different reasons. One is that they don’t have to wait long for the right infrastructure to be built to support their facilities. He cited Indiana’s high voltage transmission lines that alleviate the need for data centers to have new transmission constructed, which can take “many” years.
“The most important factor is speed,” Inskeep said. “These guys want to build now. They want to connect it fast. They're willing to pay a premium if it means going to a market that has higher costs if they can connect quicker.”
The speed factor also, Inskeep said, causes a reduction in the oversight and accountability of SMR developers. This creates the opportunity for “abuses” to happen and for lapses in consumer protection when it comes to affordability.
Along with this, Northern Indiana is near Chicago, which Inskeep said is an important market for data centers.
“We see mostly costs to the state of Indiana,” Inskeep said, “Some politicians want to attract splashy headlines about investment coming to Indiana, and they want Indiana to have the appearance of being on the cutting edge of technology. However, the costs are simply enormous and the technologies they’re pushing are both unproven and can result in sky high electricity bills.”
According to Indiana Public Media, several state representatives see the data centers as an economic opportunity for Indiana, having ripple effects and turning developer’s heads.
Often, due to high costs and delays, many nuclear reactors are never finished. In 2024, Purdue produced a study that analyzed the public opinion of nuclear energy in Indiana. They found that 46% of 1,012 respondents either “favor or strongly favor the idea of using SMR technology to produce electricity in the US.” Some of the main concerns were the risk of an accident and the production of radioactive water. Some advantages noted by the focus groups were economic development and job creation.
