Key Points
The demand for electricity is expected to rise materially in the years ahead, with artificial intelligence a main driver.
Increased demand necessitates capital investment, which helps utilities grow.
Higher utility bills resulting from increased capital spending make it more difficult for some customers to pay for electricity.
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In 2022, the U.S. utility industry had roughly $15 billion in unpaid bills it was trying to collect. By 2025, that number had hit $25 billion. The number of customers having their electricity shut off is rising, as well. This is happening at the same time as demand for electricity from artificial intelligence (AI) is rising dramatically. No wonder there's a pushback against AI data centers. Here's the problem for investors, and some possible investment solutions.
NextEra Energy jumps into an AI conundrum
Virginia is one of the world's most important data center markets. Dominion Energy (NYSE: D) operates in the state and highlights the demand growth it is seeing from AI as a catalyst for growth. Over a five-year period, electricity prices near data centers in Virginia rose by over 260%, Bloomberg reported in late 2025. That's a huge number that would make even the wealthiest of customers stop and take notice, let alone customers on tight budgets.
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NextEra Energy (NYSE: NEE), one of the world's largest utilities, has agreed to buy Dominion Energy. NextEra is leaning into the demand being created by AI, but it is also taking on the burden of justifying the spending and rate increases that AI demand will require to regulators. The deal is expected to boost NextEra's earnings growth, but only if regulators approve rate increases. But NextEra's regulated utility operation has relatively low electricity rates and tends to have good relations with its regulators, so the outlook for this pairing is fairly solid, even with questions around the impact of AI demand.
The AI issue, however, will impact utilities across the country. Scale could be an increasingly important factor in both raising capital to meet investment needs and working with regulators. Even Dividend King utility Black Hills (NYSE: BKH), a relatively small company with an over 50-year streak of annual dividend increases, has plans to merge with another company to level up. Joining forces with NorthWestern Energy (NASDAQ: NWE) will nearly double the utility's size. What that actually means for rate increases has yet to be seen.
Utility outsiders may benefit even more
What's interesting about Black Hills is that it is primarily a regulated utility. NextEra Energy is also one of the world's largest producers of solar and wind power via its unregulated contract power business. So even if it faces pushback from regulators due to rapidly rising electric bills, it can still benefit from AI demand in other ways. But that fact highlights the value of being outside the regulated structure, which is basically Constellation Energy's (NASDAQ: CEG) entire business.
Constellation Energy sells power to customers at market prices under long-term contracts from its large fleet of nuclear and gas power plants. It already has big deals with companies like Meta (NASDAQ: META) and Walmart (NASDAQ: WMT). One is looking to build AI data centers, the other is just trying to ensure it has reliable access to clean energy. Both will help Constellation grow its power business outside of the regulated framework.
Brookfield Renewable (NYSE: BEP)(NYSE: BEPC) is another solid option in the contract power space. It is focused entirely on clean energy, as its name implies. However, Brookfield Renewable offers a lofty yield of up to 4.7% from the partnership units. And a business spanning solar, wind, hydroelectric, storage, and nuclear power. It also operates in North America, South America, Europe, and Asia, enabling it to tap into global AI demand growth. For income lovers, it could be an attractive way to play the AI revolution.
Then there's Bloom Energy (NYSE: BE), which makes hydrogen fuel cells. The company entered 2026 with a $6 billion product backlog, 2.5x higher than it was a year earlier. The company's total backlog, however, is $20 billion, because each fuel cell it sells comes with a service contract. The company's products enable AI data centers to get up and running without tapping the electric grid, which has been a huge growth driver.
The only problem is that Wall Street is aware of the opportunity, with investors pushing the stock up by more than 800% over the past year. That said, Bloom Energy is in the middle of a pullback, so it may be worth keeping an eye on if you are a growth-focused investor. If the backlog is any indication, the company has years of growth ahead.
More than one way to play AI
Regulated utilities face a balancing act ahead. That doesn't mean they are bad investments, but shareholders need to recognize the risks that come with AI demand. If you are looking to invest in AI power demand, you might want to augment the regulated utilities you own with companies that operate outside of the regulated space in some way. NextEra Energy has a foot in each camp. Constellation Energy, Brookfield Renewable, and Bloom Energy all provide power outside the regulated utility framework.
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Reuben Gregg Brewer has positions in Black Hills and Brookfield Renewable Partners. The Motley Fool has positions in and recommends Bloom Energy, Constellation Energy, Meta Platforms, NextEra Energy, and Walmart. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and Dominion Energy. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
