Part 3 of an ongoing series on data centers, power, and the grid in Middle Tennessee.
Your home’s electric meter speeds up in the morning, slows down while you’re away, picks up again at dinner, and eases off overnight. Now, imagine a building where every appliance runs at full power all day, every day, even on holidays. That’s what a data center is like. It’s always on, never leaves, and never lowers the thermostat.
For about 15 years, Tennessee’s electricity use stayed mostly the same. Homes became more efficient, people switched to LED bulbs, and energy use stayed flat. But around 2020, it started to rise for the first time in 20 years. A July report from ThinkTennessee, a nonpartisan Nashville think tank, says data centers are the main reason. Data centers’ electricity use in the Tennessee Valley grew about sevenfold between 2020 and 2025.
The Demand Is Servers, Not Families
The Tennessee Valley Authority’s numbers show the same trend. In 2025, data centers made up about 18 percent of TVA’s industrial electricity use, and TVA expects that share to double by 2030. If you add up all the data centers running now and those planning to connect, TVA says they would use as much power as about six million homes, which is more than twice the number of households in Tennessee. The surge in demand is real, but it’s not because of how families use electricity. It’s not about someone leaving the lights on. The growth comes from servers.
What TVA Plans to Build
To meet it, TVA has launched what it calls the largest capital program in its history: 6.2 gigawatts of new generation, including a 1.5-gigawatt natural gas plant at Cumberland City expected online this year and another near Kingston in 2027.
To better understand units: A megawatt is a unit. One megawatt equals a thousand kilowatts. One gigawatt is a thousand megawatts. Each step is a thousand times bigger than the last. A single gigawatt can power about 800,000 homes.
The future is bigger still. In June, TVA released its 2026 Integrated Resource Plan. Think of it as the utility’s 20-year budget and shopping list. It projects electricity demand rising 16 percent by 2040 in its baseline case and up to 60 percent in the high-growth case the region is currently on track to reach. Meeting that could require up to 32 gigawatts of new capacity: as much as 26 gigawatts of natural gas, up to 5 gigawatts of nuclear, plus storage, solar, and efficiency programs. TVA also wants small modular reactors at its Clinch River site near Oak Ridge, a 300-megawatt design capable of powering roughly a quarter million homes.
A federal licensing hearing on the reactor is scheduled for Aug. 13, one week before the TVA board meets. And in February, TVA’s board voted to keep the aging coal plants at both sites running through 2039, a reversal that the Southern Environmental Law Center estimates could cost $730 million just to keep the Cumberland plant operating.
Remember the pattern from Part 1. The real question isn’t if the grid will grow, but how it will grow and who will pay for it.
Who Pays?
Tennessee has begun setting new rules. The April law discussed in Part 1 of this series stops utilities from covering infrastructure costs for large data centers. In February, TVA sent a letter to all 153 local power companies, suggesting that data centers should have their own rate class and pay upfront for the infrastructure they need. In other words, the always-on refrigerator pays its own price. ThinkTennessee’s report points out what’s at stake: in Tennessee counties with data centers, residential bills went up 3.2 percent from 2023 to 2024, while commercial customers’ bills went down a little.
One more sheet of paper recently landed on the stack. On July 23, TVA signed the White House’s Ratepayer Protection Pledge, which urges data center operators to “build, bring, or buy” the energy their projects need rather than lean on ratepayers. Governor Lee signed on too. Worth knowing: the pledge is voluntary and non-binding. It promises what the April law already requires, and it covers only who pays for power. Water, the subject of Part 2, goes unmentioned, along with noise and emissions. Pledges set the tone. Rules set the bill.
A Grain of Salt
Nationally, utilities report receiving up to 10 times more data center connection requests than facilities that get built. Developers shop the same project to multiple utilities, like a homebuyer getting pre-approved at multiple banks. That’s why TVA plans in ranges and scenarios instead of a single number. Announcements are not buildings.
Aug. 20
On Aug. 20, TVA’s board meets to vote on the Integrated Resource Plan and set next year’s capital budget. The proposed data-center rate class could come up as early as the same meeting. Pay attention to how much natural gas infrastructure gets built, whether nuclear stays on schedule, and whether data centers get their own rate class with their own price tag.
The build-out was never in question. The bill is.
Next month, Part 4: Memphis. Inside the xAI project, the environmental fight it triggered, and what happens when a data center outruns its regulators.
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Photo, top, courtesy of Robert So / Pexels
