Indiana energy officials are betting that a wave of new data centers, including power-hungry AI facilities, will help pay for the state’s rapidly expanding electricity needs while shielding residential customers from steep rate increases.
Speaking this week to the Broad Ripple GOP Club, Secretary of Energy and Natural Resources Suzie Jaworowski said the state is experiencing a sharp spike in electricity demand driven by three main forces: data centers, the reshoring of heavy manufacturing, and increasing everyday electricity use. Indiana’s grid currently runs on about 22 gigawatts of power, but the state expects demand to grow by roughly 1.3 gigawatts each year over the next decade.
“People blame data centers for higher electricity costs,” Jaworowski said, but she argued that Indiana’s policy framework is designed to have those large users pay most of the cost of new power plants and transmission lines. If the state turned them away, she added, demand would still rise due to factories and consumer usage—only then, the tab would fall more directly on ordinary ratepayers.
Jaworowski pointed to legislation passed last year, House Bill 1007, which requires large “load customers” such as data centers to cover at least 80 percent of the cost of new generation and related infrastructure. Governor Braun, she said, is pressing companies to pay even more.
“The law says 80 percent,” she noted, “but the governor is telling them, ‘We want you to pay 100 percent.’”
Under the model promoted by the administration, utilities partner with data centers to build large new power plants. The data center commits to buying the bulk of the output, while any excess power is sold into the regional market, helping to lower costs for everyone else. Jaworowski cited one example in which a utility is developing a three-gigawatt natural gas plant for a major data center customer, with roughly 2.6 gigawatts going to that company and the remaining 400 megawatts supplied to the broader grid.
According to Jaworowski, at least two Indiana utilities are preparing to file rate cases seeking to lower electricity rates, citing partnerships with data centers as a key factor.
Still, the projects face local skepticism. Some residents worry about the effect on property values, water supplies, and long-term reliability. Others simply don’t want large industrial facilities near their homes. Jaworowski acknowledged those concerns and said the state is investing in more outreach and communication to explain how the deals work and who pays for what.
At the regulatory level, enforcement of energy-related agreements with data centers falls to the Indiana Utility Regulatory Commission, which treats the companies like any other major customer. Locally, Jaworowski urged counties to hire experienced lawyers and financial experts—paid for by the developers—to negotiate and enforce incentive agreements.
As AI and cloud computing drive unprecedented growth in electricity demand, Indiana is positioning itself as a destination for data centers. State leaders say the strategy can support economic development while keeping power affordable, but they concede that success will depend not just on engineering and finance, but on persuading skeptical communities that the numbers add up in their favor.
