Microsoft pledges full cost payment for datacenter electricity use

US President Donald Trump announced on Tuesday that Microsoft has agreed to bear the full cost of electricity consumed by its datacenters, marking the first such commitment in a broader effort to prevent artificial intelligence infrastructure from raising power bills for ordinary Americans.

Writing on Truth Social, Trump declared the United States "the hottest country in the world" for AI development, whilst emphasising that technology firms constructing datacentres "must pay their own way". The announcement signals a shift in approach as communities across multiple states voice opposition to the rapid expansion of these facilities.

Microsoft President Brad Smith detailed the company's commitments during a Tuesday event near the White House focused on AI infrastructure and community relations. The plan includes measures to reduce water consumption and ensure Microsoft's power usage does not contribute to increased utility rates for residents in areas where the company operates datacentres.

Smith stated that Microsoft would pay full property taxes in towns hosting its facilities, whilst declining both tax reductions and discounted electricity rates typically offered to attract large industrial projects. In a blog post accompanying the announcement, he compared the challenge to historical infrastructure projects, questioning how transformative technology could be deployed without placing undue burden on local areas.

The commitment comes as Trump's administration has actively courted technology leaders, hosting chief executives at both the White House and Mar a Lago whilst signing executive orders aimed at reducing AI regulation and streamlining federal approval processes for datacenter construction. However, growing public resistance to these projects appears to be prompting a recalibration of policy priorities.

Trump indicated that Microsoft represents the first company to make such pledges, with discussions underway with other major technology firms to secure similar commitments.

Opposition to datacenter projects has emerged across the political spectrum and geographic regions. Residents in states ranging from Oklahoma, Tennessee and Louisiana to Oregon, California and New York have raised concerns about rising electricity costs, depleted water supplies and environmental degradation. In Wisconsin, Microsoft cancelled plans for a new facility following local protests centred partly on anticipated electricity rate increases.

The energy and water requirements of datacenters have grown substantially, particularly for facilities supporting AI workloads. A single large scale datacenter can consume electricity equivalent to a small city whilst using up to one million gallons of water daily for cooling systems. The International Energy Agency projects that global datacenter electricity consumption could double between 2022 and 2026, potentially matching the annual usage of Japan.

Microsoft's carbon emissions have risen 23 per cent since 2020, driven primarily by the expansion of its AI datacenter network. Competing technology companies including Google, Amazon and Meta have reported similar increases in emissions as artificial intelligence capabilities have expanded.

Industry impact and market implications

The agreement could establish a precedent for how technology companies approach infrastructure development as artificial intelligence computing demands continue to accelerate. If other major firms follow Microsoft's lead in absorbing infrastructure costs, it may slow the pace of datacenter construction in some regions whilst redirecting projects towards areas with more robust power grids and water resources. The commitments could also influence ongoing debates about corporate tax incentives and the true economic value that datacenters deliver to local communities. For the broader AI industry, balancing computational needs with environmental sustainability and community acceptance remains a critical challenge that will likely shape where and how future infrastructure investments are deployed.