{"id":828205,"date":"2026-07-27T00:49:20","date_gmt":"2026-07-27T00:49:20","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/828205\/"},"modified":"2026-07-27T00:49:20","modified_gmt":"2026-07-27T00:49:20","slug":"data-centers-are-actually-making-your-electric-bill-cheaper-but-sinking-ai-demand-could-change-that","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/828205\/","title":{"rendered":"Data centers are actually making your electric bill cheaper\u2014but sinking AI demand could change that"},"content":{"rendered":"

In the era of hyperscalers, the rising unpopularity<\/a> of data centers has become inextricably linked with the fear of skyrocketing utility prices. A YouGov poll<\/a> administered 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. Earlier this year, Goldman Sachs<\/a> projected the AI infrastructure buildout to increase electricity costs by 6%<\/a> between 2026 and 2027, and an additional 3% by 2028.<\/p>\n

But a recent working paper<\/a> from the Electric Power Research Institute is complicating the relationship between the AI boom and what it means for Americans\u2019 electric bill. The research suggested that up until at least 2024, data center operations defied consumer anxieties and actually caused retail electricity costs to decrease. Using data from the Federal Energy Regulatory Commission (FERC) and retail revenue from the U.S. Energy Information Administration between 2015 and 2024, researchers found a causal relationship between data center demand and electricity prices: For every doubling of data center capacity, average retail electricity prices decreased by 3.5%. On a statewide level, this decrease was about 6%.<\/p>\n

Much of this relationship can be understood through economies of scale.<\/p>\n

\u201cElectricity markets are different than a lot of markets that they interact with,\u201d Asa Watten, the study\u2019s coauthor and EPRI researcher, told Fortune.<\/p>\n

Unlike soybeans or gasoline, where prices are determined by the cost of production, electricity prices are based on cost recovery, or how much of it is consumed. As fixed costs are divided among more consumers and kilowatt hours (the standard unit of energy), more kilowatt hours mean a greater division of fixed costs and lower prices. That\u2019s in addition to load increases from increased data center usage, which causes more generators to come online, many of which are becoming more energy efficient.<\/p>\n

There\u2019s a catch to this pattern: It\u2019s not guaranteed to continue, and if the trend reverses, it could signal a broader and bigger problem with the future of AI. The writing may already be on the wall. PJM, the largest power grid operator in the country, projected in a report this week that a $6.3 billion increase<\/a> in consumer electricity costs over the next three years can be mostly attributed to increased data center power demands. The rise in data center construction\u2014expected to reach $7 trillion<\/a> in spending by 2030\u2014is already correlated with increased power costs. In Virginia, the state with the most data centers, residential electricity prices have increased by more\u00a0 than 13% in the last year, according to data from the U.S. Energy Information Administration (EIA)<\/a>.\u00a0<\/p>\n

What will determine the future relationship between data centers and electricity costs?<\/p>\n

Watten explains that the largest determinant of future electricity prices will be if the rapid and rampant AI buildout lives up to the hype.\u00a0<\/p>\n

\u201cIf the grid builds capacity, expecting a lot of demand from data centers, and that doesn\u2019t 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,\u201d he said.<\/p>\n

Data centers are expected to incur a great deal of fixed costs, and if customers for those data centers aren\u2019t there, \u201cthen your denominator is less than you thought it would be,\u201d Watten continued. \u201cYou\u2019re spreading those fixed costs amongst fewer people. It\u2019s the opposite of what we want to be doing, so that could increase prices.\u201d<\/p>\n

Amid a debate of an AI bubble<\/a> and when it will pop, there are some signs that investors are growing more skeptical of the technology\u2019s promise. On Thursday, share prices for Tesla<\/a> and Alphabet<\/a> took a tumble <\/a>following both companies announcing an increase in AI capital expenditures.<\/p>\n

In an episode<\/a> of the All-In podcast this week, billionaire investor Mark Cuban warned \u201ca lot of data centers\u2026are going to be turned into pickleball courts\u201d because while hyperscalers are correctly assuming AI adoption will continue to increase, AI will become cheaper to use because of increased power efficiency, meaning all of the capacity being created through data centers will not be necessary.<\/p>\n

But there is an optimistic read here, Watten said. He doesn\u2019t like to speculate on what the future of AI holds and what that means for the data center buildout, but generally speaking, energy will continue to become more efficient. Electrification, though more electric vehicles and electric heat pumps in addition to data center growth, could continue to reduce household energy costs in a way that could happen independent from an AI boom.<\/p>\n

\u201cThis clearly efficiency-increasing thing or total budget-reducing thing could have positive spillovers to your neighbors,\u201d Watten said, \u201csuch that more electric cars means that if done well, prices are also going down\u2014or at least not going up.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"In the era of hyperscalers, the rising unpopularity of data centers has become inextricably linked with the fear…\n","protected":false},"author":2,"featured_media":828206,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,276,277,49,48,9564,61764,16745,2546,61],"class_list":["post-828205","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-ca","tag-canada","tag-data-centers","tag-electrical-grid","tag-electricity","tag-infrastructure","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/828205","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=828205"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/828205\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/828206"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=828205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=828205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=828205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}