With more people using artificial intelligence chatbots like ChatGPT, companies are trying to incorporate AI into TVs, phones, toilets and pretty much anything with an electrical plug and a WiFi connection.
In fact, companies are investing about $3 trillion in the data centers they say are needed to process so much information. And in Indianapolis, officials have already fielded four data center proposals, two of which are currently active.
Metrobloks wants to build a 53-megawatt data center in Martindale Brightwood on the former site of the Sherman Drive-In Theater, which closed in the 1980s.
Sabey Data Centers wants to build a 250-megawatt data center in Decatur Township.
At full use, those data centers would need up to 303 megawatts at any given moment to operate. That’s about the same energy it takes to power between 151,500 and 303,000 homes for an hour. But at full capacity the data centers would be pulling that amount of electricity all day, every day.
AES Indiana said it has the electricity it needs to power the two proposed data centers, but if more are built here the company may have to build a new power plant — the cost of which would be passed on to all of its customers.
Even if more data centers don’t get constructed within city limits, building more data centers elsewhere could make electricity more expensive for all.
Mirror Indy asked AES Indiana about its plans to deal with data centers and spoke to energy policy expert Ben Inskeep, who is program director for the nonprofit consumer advocacy group Citizens Action Coalition, about how those plans could affect Indianapolis residents.
Here’s what we learned.
Does AES Indiana have enough power for these data centers?
Mirror Indy asked AES Indiana whether the utility will have enough power to support those two proposed data centers without affecting residential customers.
“When data centers or other large load customers choose to locate in our service territory, AES Indiana will fulfill its electric service obligation with generation resources included in the utility’s integrated resource planning document,” a company spokesperson said in a written response.
To provide enough energy for its approximately 531,000 customers, AES Indiana produces more than 3,660 megawatts of electricity from several fossil fuel power plants and solar and wind generators across the state.
It is adding another 335 megawatts of solar energy and 130 megawatts of battery storage in southern Indiana.
The 303 megawatts needed to power the two proposed data centers would use about 8.2% of the total energy produced by AES Indiana today.
The four companies trying to build data centers here all received notices from AES Indiana — called “will serve” letters — that assured them that AES had enough electricity to serve their needs.
“Our team has reviewed the requirements and specifications provided by your company and has determined AES Indiana has the ability to develop the generation, transmission, and distribution infrastructure to meet your needs,” reads the letter sent to Sabey Data Centers, for example.
We could pay more for electricity if we build more power plants
If enough data centers are built within AES’ territory, the utility may have to consider building additional power plants, according to its long term energy plan.
That could include building a natural gas-fired power plant that would produce up to 700 megawatts of electricity and up to 820 megawatts of battery storage.
The company’s service area includes all of Marion County and small portions of eight surrounding counties.
If companies choose to build data centers outside AES Indiana’s service area, the company said it would not pursue additional generation and storage.
We asked AES Indiana if ratepayers would have to pay more on their monthly bills if the company needs to build new power plants to support data centers.
A company spokesperson did not directly answer the question, but said AES “is committed to keeping energy costs fair for all customers while meeting the growing energy demands of Central Indiana.”
Utilities typically pass on the cost of paying for construction to their ratepayers, including residential customers. That was the case for much of the conversion of AES’ Eagle Valley Generating Station from a coal plant to a natural gas plant.
If AES Indiana builds a new plant, it could cost potentially hundreds of millions of dollars to connect that plant to the transmission grid. Traditionally, AES Indiana has spread that cost among its customers, too.
And if AES pursues a power plant, but the data center companies close facilities or go offline, customers may end up paying for those projects in the long run.
Increased demand could mean we pay more
If companies build data centers in Indianapolis and AES doesn’t build more plants, costs could still go up for ratepayers.
“If you have more demand and supply stays the same, your price goes up. That’s what we’re seeing in regional grids,” Inskeep said.
Most of Indiana is part of the regional electrical grid known as the Midcontinent Independent System Operator, often called MISO for short. Part of northeast Indiana is in the neighboring electrical grid, called the PJM Interconnection.
Regional grids work to ensure there’s enough electricity to go around. How they do so is complicated, but, in short, they manage electricity transmission and act as a stock market for power companies to sell the energy they make.
According to Inskeep, there’s a lesson to be learned in how the PJM grid is dealing with data centers.
Data center energy needs accounted for about 40% of energy costs for power companies in 2027 and 2028, which are set in capacity auctions. But because there is projected to be 20% less energy available than expected in that grid, prices for that energy reached record highs.
MISO has begun the approval process to introduce 25 new power projects to the grid that would add 11.4 gigawatts, or 11,400 megawatts of electricity by August 2028.
That could prevent prices from going up here like they did in the PJM grid, unless the construction of data centers outpaces the available supply of electricity.
AES and at least one data center company have said the companies will foot the bill for the increased electricity demands. But there are plenty of scenarios that could result in rate increases for residents.
An AES spokesperson said customers that use a lot of electricity “pay the full cost of the generation and infrastructure needed for their expansion, protecting families and small businesses from additional costs.”
Ben Inskeep said that would be a unique occurrence in Indiana. Power companies such as Duke Energy, which serves the suburbs and most of Indiana, and Indiana Michigan Power, which serves parts of northeast Indiana, do not make data centers pay those costs. They pass those costs onto their customers.
Inskeep also said whether or not AES Indiana charges customers more for their electricity due to new data centers depends on what final deal is reached between the company and its prospective customers.
That’s still very much up in the air.
Sabey said under any future deals, data centers would pay 100% of customer-specific infrastructure, dedicated facilities and all applicable riders and contributions required for their service.
Even then, Inskeep said, the devil will be in the details.
Because the proposed projects haven’t been approved by the city, neither Metrobloks nor Sabey has signed a contract with AES Indiana to purchase power. The details would determine how much the companies would pay for their infrastructure.
“We don’t have anything in writing yet. It’s very much at an early stage where we’re hearing kind of general promises or PR sound bites that sound good, but we don’t have the rules in place to guarantee it,” Inskeep said.
Mirror Indy, a nonprofit newsroom, is funded through grants and donations from individuals, foundations and organizations.
Mirror Indy reporter Enrique Saenz covers west Indianapolis. Contact him at 317-983-4203 or enrique.saenz@mirrorindy.org. Follow him on Bluesky at @enriquesaenz.bsky.social.
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