Uh-oh, data centers actually lower energy prices
Counter-narrative result: data center buildout between 2015 and 2024 *reduced* electricity prices in America
The finding is consistent with economic reasoning: existing large power system fixed costs, economies of scale in transmission and distribution, and declining unit costs for generation imply that durable demand growth lowers average prices.--Sam Bowman on X
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Here's how: Data centers achieve economies of scale, hence lower prices
We estimate that data centers caused average retail electricity rates to fall modestly in the United States from 2015 to 2024, using an instrumental variables approach.
We find patterns of economies of scale for transmission, distribution, and generation costs as well as within and across retail customer classes. We caution that future supply constraints could reverse the effect.
In 2024, data centers used about 4.5% of electricity in the United States, more than double their consumption five years earlier, and are projected to account for 9-17% by 2030 (Electric Power Research Institute, 2026a).
Perceived rate impacts are a central point of contention, motivating the March 2026 “Ratepayer Protection Pledge Proclamation” issued by the White House and signed by seven major technology companies. Roughly 70% of Americans say they oppose data centers being sited near them (Jones, 2026).
From 2014 to 2020 demand fell by 0.3% year over year while average prices grew at a rate of 0.2%, well below inflation during this period. From 2021 to 2024 demand grew on average a modest 1.5% year over year while electricity rates grew at 5.2%, in line with the average annual increase in core consumer prices of 5.8% (U.S. Energy Information Administration, 2025), meaning inflation adjusted electricity rates were flat on average.--arXiv.
(Editor's note: arXiv is a free distribution service and an open-access archive for nearly 2.4 million scholarly articles in the fields of physics, mathematics, computer science, quantitative biology, quantitative finance, statistics, electrical engineering and systems science, and economics.)
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