Have Data Centers Actually Raised Electricity Prices?

Rising electricity prices have many causes, but data centers are not yet one of them

By Paige Lambermont.

"Data centers have commanded significant ire recently, as their power demand rises and ratepayers are concerned about price increases. But this is a faulty narrative. At least to this point, data centers have not been shown to have caused higher power prices. 

A study released in March 2026 by the Institute for Energy Research (IER) found, consistent with the findings of other recent reports, that the correlation between number of data centers and current electricity prices was statistically insignificant. That study also found that data center concentration did not have a statistically significant relationship with faster price increases. 

The most important conclusion of the IER study was that states that experienced an increase in electricity sales from 2015 to 2025 paid less on average for power than states where sales declined. This finding runs counter to the assumption that rising power demand from data centers and other sources will inherently lead to price increases in the places where it occurs. Power price increases occurred across the country between 2015 and 2025, but states with shrinking electricity sales (-9 percent  to -1 percent) averaged the highest price increases 50.6 percent on average, while states with rapid growth (25 percent-53 percent) experienced the lowest price increases, 15.4 percent on average. 

Spreading the fixed costs of the power grid across new entrants can help lower costs. When customers leave the service area, the fixed costs of that power grid don’t disappear with them but are spread across fewer ratepayers. 

There is real risk when building new generation if customers who would  consume the power do not materialize. However,  if  agreements between utilities and new customers have  realistic  timelines for the duration of the demand , new customers could prove to be beneficial rather than a guaranteed cost burden. 

The costs of the power grid, especially transmission, have increased in recent years. This is in large part due  to  aging infrastructure  and more wind and solar generation being built far from the population centers it serves.

Higher electricity prices have been and will continue to be a problem for utilities and their customers going forward. Much of this is already being attributed to data centers in the public consciousness. This is not reality, but the coinciding timelines of power price increase announcements and the announcement of plans to build new data centers has indelibly tied the two issues together in the minds of many. 

Even when a new data center hasn’t yet been built or even permitted at the time of a price increase, it’s easy to assume a connection when one is reading the news. It’s important to look more closely at what is happening in power markets. 

Looking closer, it’s clear that attributing existing price hikes to data centers is inaccurate. This could change in the future, but it’s essential to understand what has happened so far to ascertain where cost increases are coming from."