Microsoft said it will pay more for electricity and use less water to support its artificial intelligence real estate, part of a broader policy rollout after President Donald Trump called for tech giants to foot the bill on higher utility rates from the data center development boom.
The Redmond, Washington-based firm unveiled a plan Tuesday to pay its own way for utilities, create jobs and add to the tax base of communities without asking for local property tax breaks. It comes during a rising backlash across the country against AI data center construction.
Microsoft’s AI infrastructure buildout will proceed only when communities feel the gains outweigh the costs, Microsoft President Brad Smith said in a presentation.
“Especially when tech companies are so profitable, we believe that it’s both unfair and politically unrealistic for our industry to ask the public to shoulder added electricity costs for AI,” Smith said. “Instead, we believe the long-term success of AI infrastructure requires that tech companies pay their own way for the electricity costs they create.”
Microsoft’s announcement comes as tech giants such as Amazon, Facebook and Instagram owner Meta, Google, OpenAI and Elon Musk’s xAI are pursuing national data center buildouts, often accompanied by deals with energy firms for large-scale projects such as nuclear reactors and gas turbines to provide electricity.
Microsoft said its pledge “commits us to the concrete steps needed to be a good neighbor in the communities where we build, own, and operate our datacenters.” Trump said in a Truth Social post on Monday that tech firms would be making announcements on the issue.
“I never want Americans to pay higher Electricity bills because of Data Centers,” Trump wrote on Monday. “Therefore, my Administration is working with major American Technology Companies to secure their commitment to the American People, and we will have much to announce in the coming weeks.”
Supporting the data center boom
Data center development is spreading across the country. In some of the latest data center announcements, Meta reportedly bought 474 acres south of Albuquerque, New Mexico, to expand its Los Lunas data center campus, and Amazon is planning an expansion of its data center built in 2021 on the west side of San Antonio, Texas, according to published reports.
Higher electricity prices are likely to become a more significant factor in community resistance to new data centers in the next few years, said Juan Arias, CoStar’s national director for industrial market analytics.
“Electricity prices across the U.S. have risen on average 7.8% annually in the last five years and stood at around 19 cents per kilowatt hour as of the end of 2025,” Arias said. “This is out of the norm for a market that has been consistently priced between 13 and 14 cents per kilowatt-hour since 2009.”
Power purchase deals announced by Amazon, Microsoft, Google and OpenAI with nuclear firms help them tap all available sources to address grid-draining energy needs resulting from the proliferation of data centers.
In one example, Microsoft signed a 20-year power-purchase agreement with Constellation in 2024 that would restart the former Three Mile Island plant in Pennsylvania. More recently, Meta signed energy deals that could bring 6.6 gigawatts of power online — enough to power about 5 million homes — as the company expands its data center network across the United States.
Nuclear projects, such as Meta’s venture with TerraPower, may help eventually address supply issues, Arias said. But those efforts are years away from bringing the first reactors online, with wide adoption of nuclear even further down the road.
“This has prompted many data center players to work with the existing grid infrastructure for now, using such means as onsite batteries to secure energy during off-peak hours,” Arias added.
Responding to resident criticism
At the top of Microsoft’s five-point “Community-First AI Infrastructure” initiative is its pledge to “pay our way to ensure our data centers don’t increase your electricity prices.” The firm will work with utility companies to cover the costs for both using energy and expanding the electrical grid. Microsoft also promised to replenish more water than it withdraws locally to cool its data centers.
The firm said it will “pay our full and fair share of local property taxes, adding revenue at a time when many cities and towns are facing revenue shortages that threaten vital public assets like hospitals, schools, parks and libraries,” Smith said.
Other tech giant have taken similar steps in response to pushback from residents and politicians.
For example, Menlo Park, California-based Meta has extolled the virtues of data center development in TV commercials that include a farmer who notes that Meta’s new data center in Iowa is bringing more jobs to the area, helping to offset a decline in agriculture revenue.
Google has invested in local water conservation projects that benefit the entire community, not just the facility. Apple and other firms have developed or invested in wind and solar renewable-energy projects that add excess power to the local grid, helping offset the data center’s energy demands.
Several companies, including Meta and Microsoft, are partnering with nearby high schools and community colleges to provide science, technology, engineering and mathematics education and programs to train residents for future tech jobs.