Lawmakers to Energy secretary: Canceled projects won’t help AI data center demands

Colorado Democrats are demanding answers from the Department of Energy following the cancellation of billions in funding for energy projects, a move they say makes no sense given surging utility costs brought on by AI data centers.

In a letter sent Tuesday to Energy Secretary Chris Wright, the Democratic lawmakers railed against the DOE’s “abrupt cancellation of $7.56 billion in energy project funding,” including more than $600 million that had been awarded to 38 Colorado projects.

Sens. Michael Bennet and John Hickenlooper, and Reps. Joe Neguse, Diana DeGette, Jason Crow, and Brittany Pettersen made the case that the terminations of those projects will not only have “harmful impacts” on Colorado’s workforce and economy, but also on energy costs throughout the state amid the rapid buildout of AI data centers all over the country.

“DOE investments are vital to lowering costs for consumers and maintaining U.S. leadership in a rapidly evolving global energy landscape,” the lawmakers wrote. “In an era where artificial intelligence and data centers are driving a rise in energy demand, we must meet these challenges by investing in responsible and affordable energy solutions, rather than destabilizing them.”

The Energy Department announced the elimination of 321 financial awards supporting 223 projects on the second day of the ongoing government shutdown, proclaiming in a press release that those projects “did not adequately advance the nation’s energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars.” 

Renewable energy projects were hit especially hard, as the DOE slashed awards issued by the Offices of Clean Energy Demonstrations, Energy Efficiency and Renewable Energy, and Grid Deployment. Other canceled projects were initiated by the Manufacturing and Energy Supply Chains, Advanced Research Projects Agency-Energy, and Fossil Energy offices.

“On day one, the Energy Department began the critical task of reviewing billions of dollars in financial awards, many rushed through in the final months of the Biden administration with inadequate documentation by any reasonable business standard,” Wright said in a statement. “President Trump promised to protect taxpayer dollars and expand America’s supply of affordable, reliable, and secure energy. Today’s cancellation’s deliver on that commitment. Rest assured, the Energy Department will continue reviewing awards to ensure that every dollar works for the American people.”

The Colorado Democrats strongly rejected Wright’s assertion that projects were “rushed” through the process, noting that applicants “underwent rigorous, externally vetted” reviews and had “invested significant private capital, trusting that the federal government would honor their commitments.”

“Some companies now face closure or layoffs as a direct result of these cancellations,” they noted.

The Colorado Energy Office projected that the state could see a 14% jump in peak demand between 2024 and 2031. Increases of that kind have become common across the country with the speedy construction of AI data centers, sparking massive pushback from consumers who can’t keep up with their utility bills. 

Congress has begun to take note, with one bipartisan House bill introduced last month that calls for a study from the DOE and the departments of Interior and Agriculture into the impact AI data centers are having on rural areas. Trump’s AI Action Plan, however, pushes for the swift buildout of data centers by embracing “new sources of energy to power it all.”

The DOE did not respond to a request for comment by the time of publication.