Arizona utilities scramble to keep up as data center boom drives rapid expansion of the power grid
Arizona's rapid data center expansion is pushing Arizona Public Service and Salt River Project to add substantial generation and transmission capacity. Regulators and consumer advocates are debating whether residential customers are being forced to pay costs driven by data center demand.
Arizona's data center boom is placing increasing pressure on the state's electric grid. Arizona Public Service says it is seeking 8 gigawatts of additional capacity by 2031, with roughly 4.5 gigawatts expected to serve data centers, while Salt River Project is developing about 2.4 gigawatts of transmission capacity for 10 prospective data center customers.
The growth has raised concerns about reliability, project cancellations and cost shifting. The rejected La Osa project near Eloy would have required up to 3 gigawatts, while other projects are seeking independent power sources or grid connections. Attorney General Kris Mayes, consumer advocates and Western Resource Advocates have urged scrutiny of whether APS customers are subsidizing data center-related investments; the Arizona Corporation Commission regulates APS rates and approved a 9.47% shareholder return in 2024 as the utility seeks a residential rate increase.