AI demand tests Charlotte grid

Key points:

• • A proposed Charlotte data center highlights growing tension between local concerns and rising national energy demand.
• • Data centers, even small ones, are driving major utility investment and electricity cost increases.
• • The core issue is cost allocation, as regulators and utilities debate who should pay for grid expansion.

April 2026 — A proposed data center in east Charlotte is pulling a national energy debate into a local zoning fight.

Residents are pushing back on a small facility planned along Hood Road. Their concerns reflect broader questions about electricity demand, infrastructure costs, and who pays for grid expansion.

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Local site. National tension.

American Tower plans a roughly 40,000-square-foot data facility on about one acre. The site sits near residential areas and is about a mile from Reedy Creek Nature Preserve. The company says the project is small relative to hyperscale campuses.

The building would be approximately 2% the size of a hyperscale data center and would use about 2% of the power those require. The design includes closed-loop cooling systems that do not draw from the local water supply, according to the company.

Opposition has scaled quickly. A petition has drawn more than 3,200 signatures. Residents cite concerns about utility costs, environmental risk, and land use compatibility. 

City Council member Dimple Ajmera has called for a pause on data centers in residential areas.

“This is not about being anti-growth… It’s about smart growth that respects our existing communities,” Ajmera said, as cited by WSOC-TV.

“Data centers tend to be polarizing — people are often either fully for them or fully against them. They’re driven by power availability. One misconception is that a data center will use every bit of available power and leave residents without electricity, but that’s not accurate. These projects negotiate with power providers up front to make sure they can ramp up capacity to meet the data center’s needs,” Beth Milton, county manager for Iredell County, told Invest: Charlotte.

Small project. Real load.

Even smaller data centers operate with constant electricity demand. That load profile is driving a structural shift in U.S. power consumption.

Data centers account for roughly 1% to 1.5% of global electricity demand, according to the International Energy Agency. Growth is accelerating as AI workloads expand.

Additionally, energy use in large facilities is rising rapidly. Workloads tied to artificial intelligence are increasing electricity demand despite efficiency gains, according to Utility Dive. In the United States, data centers are now the fastest-growing source of electricity demand, surpassing traditional sectors in growth rate.

Utilities face cost pressure

Utilities are scaling infrastructure to meet this demand. That includes new generation, transmission lines, and substations.

Spending is rising sharply. According to Reuters, Duke Energy has increased its five-year capital plan to $103 billion, citing demand growth driven in part by data centers.

The company has signed agreements for 4.5 gigawatts of data center load, with a pipeline of nine gigawatts. For reference, one gigawatt is enough to power about 750,000 homes.

At the same time, utilities face higher input costs. According to Utility Dive, Grid equipment, such as transformers and transmission lines, is becoming more expensive due to rising metal prices.

Analysts describe the current cycle as a shift from demand growth to cost stress.

A system-cost stress test… where rising capital intensity, regulatory recovery mechanisms, and customer affordability increasingly intersect.

Bills are rising

The cost of that expansion is reaching customers.

Duke Energy is seeking to raise residential rates by up to 18% in North Carolina. Average monthly bills could increase by about $34 by 2028, according to WRAL News. Electric bills in the state have already risen about 22% since 2020.

There’s a lot of investment going into our electric system right now… improvements, upgrades, and infrastructure to support growth.

Nationally, electricity prices are also trending upward. Residential rates rose about 33% from 2019 to 2025, according to analysis from Lawrence Berkeley National Laboratory and The Brattle Group.

Who pays is the core issue

The Charlotte dispute reflects a larger structural question: how to allocate the cost of serving large energy users.

Utilities traditionally spread infrastructure costs across all ratepayers. That model is now under pressure. Previous research from Harvard also warned that ratepayers may absorb costs tied to data center growth if pricing structures do not fully assign costs to large users.

Regulators are also experimenting with new tools, and large-load tariffs are expanding across the United States to ensure data centers pay more of the infrastructure costs they drive.

“You can’t have every line in the ground in advance, so there’s always a balancing act between current demand, long-term projections, and what fits within our capital improvement plan. That’s especially true on the power side as data centers and AI-related uses drive huge electricity needs. From an electric-utility standpoint, data centers can be attractive, but from an economic development and community-balance standpoint, you have to ask whether those projects truly fit your vision and deliver the return you want for your residents,” Lisa Brown, director of economic and urban development for the city of Rock Hill, said in a recent interview with Invest: Charlotte.

Risk is not one-directional

The buildout carries financial risk for utilities as well.

If demand projections fall short, infrastructure investments could become stranded. That concern is tied to uncertainty around AI-driven demand.

In a market correction, it’s possible that data centers will end up crashing out of their tariff arrangements.

Unlike past cycles, data center assets are harder to repurpose if demand drops, while utilities must plan decades ahead despite rapidly shifting technology demand.

Charlotte is emerging as a viable market for data center development, even if it is not yet a primary hub.

“More recently, we’ve seen a surge in mission-critical work, particularly around data centers. Charlotte has become a highly attractive market for that kind of development. It has available power capacity, competitive rates for high-usage customers, and plenty of land in proximity to the metro area. There’s also a well-established fiber network in the region, much of it built to support the banking industry. All of those factors make Charlotte an ideal location for mission-critical construction,” Steve Smith, executive vice president at McKenney’s, shared with Invest: Charlotte.

Want more? Read the Invest: Charlotte report.