Microsoft says it won’t drive up electricity cost near its data centers

The proliferation of AI data centers across the country has raised concerns about increasing electricity prices, the impact on local water supplies, and whether the facilities actually benefit the communities in which they are built.

Now Microsoft (MSFT) says it’s taking steps to address those issues with what it refers to as its community-driven AI plan. President Brad Smith unveiled the effort in a speech in Washington, D.C., on Tuesday, laying out how the company will work to ensure it doesn’t negatively affect towns where data centers are constructed.

Microsoft stock fell more than 1.8% in early trade.

Backlash against data centers has been growing in parts of the country over concerns about the massive amounts of electricity and water needed to power and keep cool the thousands of chips running inside the gargantuan buildings.

To tackle the problem, Smith laid out five key areas he says Microsoft will work to deal with community fears: electricity, water, jobs, taxes, and skills.

“We are here today for one reason above all else, because we are at a moment in time when we need to listen and we need to address these concerns head on,” Smith said.

“In short, as a sector, as an industry, as a country, and community by community, we need to raise the bar. And here at Microsoft, we’re focused first and foremost on raising it on ourselves to address the issues that people care about.”

According to Smith, the first step is for Microsoft to pay its way to ensure that its data centers don’t raise electricity prices. Rising electricity costs have become a flashpoint around data center construction. And while there are a number of reasons for electricity price increases, ranging from infrastructure upgrades to inflation, data centers could drive up costs for consumers.

Microsoft says it will work with local utilities to provide a better understanding of its electricity needs and “bear the cost” when electricity companies need to upgrade their transmission capabilities to meet data center demand.

“I think the bare minimum, as we look to the future, is to give these communities around the country the confidence that when a data center comes, its presence will not raise their electricity prices,” Smith said.

In addition to electricity, the Microsoft president also discussed data center water usage, saying that Microsoft will replenish more water than it uses to cool its systems.

On the jobs and tax front, the company says it will work to train local workers to build data centers and the necessary employees needed to run the systems. Microsoft also said it will not ask local municipalities to lower property tax rates for data centers and will invest taxes it pays into community services. It will also work to support job training at community colleges and universities for AI-based jobs.