Data center boom risks reversing electricity cost gains, with $7 trillion（約1100兆円） buildout at stake

A working paper from the Electric Power Research Institute challenges the prevailing narrative that data centers drive up electricity costs. Using Federal Energy Regulatory Commission data and U.S. Energy Information Administration retail revenue figures spanning 2015 to 2024, researchers discovered that data center operations actually caused retail electricity prices to fall. For every doubling of data center capacity, average retail electricity prices decreased by 3.5% nationally—about 6% on a statewide level. This finding contrasts sharply with consumer anxiety: a YouGov poll last year found that among 1,000 Americans, more than two-thirds expected electricity prices to rise if a data center was built in their area.

The mechanism behind this price decline lies in how electricity markets work. Unlike commodities priced by production cost, electricity prices depend on cost recovery—how fixed infrastructure expenses are divided among consumers and kilowatt-hours consumed. As data center demand grew, utilities spread those fixed costs across more total consumption, lowering unit prices. Additionally, increased data center demand prompted more generators to come online, many of them more energy efficient than legacy plants, further reducing costs. Asa Watten, the study's coauthor and EPRI researcher, explained to Fortune: "Electricity markets are different than a lot of markets that they interact with." The pattern created a win-win: hyperscalers got cheaper power, and consumers benefited from lower bills.

But that trend faces an existential threat. The $7 trillion（約1100兆円） data center spending expected through 2030 assumes sustained, rampant AI adoption. If that demand fails to materialize, utilities will be left with excess capacity and fixed costs to recover from a smaller customer base, reversing the price-decline pattern. Watten warned: "If the grid builds capacity, expecting a lot of demand from data centers, and that doesn't show up, that could be a clear story of how data centers could increase prices in the future in a way that they did not do in the past." Early signs suggest the reversal may already be underway. Goldman Sachs projects electricity costs will rise 6% between 2026 and 2027, with an additional 3% increase by 2028. PJM, the largest power grid operator in the country, projects a $6.3 billion（約1兆円） increase in consumer electricity costs over the next three years, mostly driven by increased data center power demands. In Virginia, the state with the most data centers, residential electricity prices have surged more than 13% in the past year, according to the U.S. Energy Information Administration.

Skepticism about the AI boom's sustainability is beginning to surface among investors. On Thursday, share prices for Tesla and Alphabet fell following announcements of increased AI capital expenditures. Billionaire investor Mark Cuban went further on the All-In podcast this week, warning that "a lot of data centers…are going to be turned into pickleball courts" because hyperscalers, while correctly assuming AI adoption will increase, underestimate how rapidly AI will become cheaper to use due to efficiency gains—meaning much of the capacity being built will prove unnecessary. Watten, however, offered a more optimistic framing. While he avoids speculating on AI's future trajectory, he noted that energy efficiency improvements will likely continue independent of whether the AI boom meets expectations. Electrification through electric vehicles and heat pumps, combined with data center growth, could continue reducing household energy costs. "This clearly efficiency-increasing thing or total budget-reducing thing could have positive spillovers to your neighbors," Watten said, "such that more electric cars means that if done well, prices are also going down—or at least not going up."

For nearly a decade, data center expansion has been an unexpected benefit to American electricity consumers. The Electric Power Research Institute's research shows a clear causal relationship: each doubling of data center capacity between 2015 and 2024 correlated with a 3.5% drop in retail electricity prices. This counterintuitive pattern reflects how electricity markets operate differently from typical commodities. Rather than pricing based on production cost (like soybeans or gasoline), utilities recover costs by dividing fixed infrastructure expenses across the total consumption. More data center demand meant more kilowatt-hours to split those costs, and more efficient generators coming online to meet that demand—a virtuous cycle for consumers.

That cycle is now at risk. The $7 trillion（約1100兆円） data center buildout projected through 2030 assumes sustained, rapid AI adoption. But if that adoption slows or plateaus while utilities have already expanded capacity, the math flips. Fixed costs that would have been divided among heavy data center usage will instead be spread among fewer paying customers, raising prices. Asa Watten, the study's coauthor, frames it plainly: the trend's continuation is "not guaranteed." Early warning signs are visible. Virginia, home to the largest concentration of data centers, has seen residential electricity prices jump more than 13% in the past year. Goldman Sachs and PJM both project significant cost increases starting in 2026, driven largely by data center expansion.

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