MONROVIA, October 19, 2026 — A $10 trillion investment in data centers now represents nearly 4% of U.S. GDP, according to a Columbia Business School report, marking the largest financial bet in American history.
This surge in hyperscale facility construction is driving unprecedented demands on power grids, prompting utilities and tech firms to collaborate on dedicated infrastructure solutions that balance reliability with regulatory safeguards for existing customers.
The Scale of the Data Center Boom
Today’s data center buildout involves a $10.3 trillion investment, dwarfing historical booms like railroads and electrification, according to a report by Columbia Business School professor Stijn Van Nieuwerburgh. That figure represents nearly 4% of U.S. GDP, almost twice the economic impact of 19th-century railroad expansion. States such as Texas, Virginia, Ohio, and Georgia are seeing the largest concentrations of investment, with Texas alone projected to absorb $638 billion over three years. Southern states dominate the landscape for planned facilities, with significant numbers also proposed in Arizona, California, Florida, Indiana, Iowa, North Carolina, Oregon, Pennsylvania, and Washington, per a Pew Research Center report from April 2026. The profitability of AI has yet to match the scale of spending, with IIR senior vice president David Pickering noting that regulation will be key to long-term viability. Over the past two years, new construction value for data centers has more than doubled to $85 billion annually, while all other construction value has dropped 8%, according to a Stateline analysis of U.S. Census Bureau data. As data center value grew by $48 billion since 2024, new housing and apartment construction fell by $29 billion, signaling a shift in capital allocation that has drawn concern from policymakers about crowding out job-creating ventures.
Utility Partnerships and Dedicated Power Infrastructure
In Monrovia, Indiana utility regulators unanimously approved a plan for AES Indiana to build solar, battery storage, and electric line projects to power a 390-megawatt Google data center. The approval followed a October 7 meeting of the Indiana Utility Regulatory Commission, which found the project compliant with a 2025 state law requiring large electricity users to cover 80% of costs reasonably assigned to them while protecting existing and future customers. The Monrovia project is the first data center filed under this law. AES estimates the infrastructure investment at $1.3 billion, with the total energy project cost at $737.3 million. The project includes two battery energy storage systems and a solar facility designed primarily to serve large electricity customers like the Google data center. Commissioner Joby Jerrells testified that AES Indiana had confirmed Google would pay for at least 100% of the costs under statutory requirements, exceeding the obligation substantially. AES US Utilities CEO Gustavo Garaviglia stated that Google will pay $32.3 million for direct connection facilities, while $73.8 million in network upgrades will be included in AES’s transmission rate base and recovered in future retail rates. Bickey Rimal of Concentric Energy Advisors testified that assigning all transmission upgrades to Google would be unreasonable, as the utility had not done so with past customers and the upgrades benefit all users — a view the commission accepted.
Integrating Solar and Battery Storage for Grid Stability
The Monrovia project incorporates two battery energy storage systems and a solar facility to manage the variable and intense power demands of the Google data center. AES Indiana says the energy project is designed mainly to serve large electricity customers while protecting current AES customers. The Citizens Action Coalition objected to initial proposals that would have shifted upgrade costs to existing ratepayers, but AES maintains that Google’s payments to the utility system will offset those burdens. Brian A. Wright of the Indiana Office of Utility Consumer Counselor testified that transmission upgrades would not be necessary without the data center’s energy needs, though his office did not oppose the plan. Ben Inskeep of the Citizens Action Coalition highlighted concern over a $74 million set of transmission upgrades specifically triggered by the Google data center’s addition to the grid, noting already high bills in Indianapolis. Regulators’ written order emphasizes that the project protects current and future customers while fulfilling the state’s cost-sharing mandate.
Regulatory Oversight and Customer Protections
Indiana’s 2025 law marks a shift in how states approach data center development, requiring large users to shoulder a significant share of infrastructure costs. The Monrovia project’s approval reflects efforts to prevent everyday customers from bearing the financial burden of grid expansions driven by private tech investment. Regulators included input from the Indiana Office of Utility Consumer Counselor, the Citizens Action Coalition, the AES Indiana Industrial Group, and Morgan County residents during the proceedings. While the law mandates that 80% of reasonably assigned costs be covered by the large user, the Monrovia agreement goes further, with Google assuming full responsibility for the energy project’s direct costs. The decision to include $73.8 million in transmission upgrades in AES’s rate base — to be recovered over time through retail rates — was supported by consultants who determined the upgrades provide broader grid benefits. This approach aims to balance the need for rapid, reliable power delivery to hyperscale facilities with the long-term affordability of electricity for households and businesses across the service territory. As data center construction accelerates nationwide, states are reevaluating tax incentives and permitting processes, with Oregon’s governor recently pausing pollution permits for new data centers to allow time for regulatory review. The broader stakes involve ensuring that the digital economy’s growth does not undermine energy equity or grid stability for the wider public.
Sources
- Data centers are now the largest financial bet in US history
- Indiana approves AES plan to power Google data center in Monrovia
- Gov. Kotek expands Oregon data center moratorium
Photo: Presidential Communications Office (Public domain)
