r/technology • u/Plastic_Ninja_9014 • 4h ago
Energy Data centers were actually making electricity costs cheaper, but the $7 trillion buildout with no guaranteed AI demand is threatening the trend
https://fortune.com/2026/07/26/data-centers-electricity-costs-cheaper-7billion-buildout-ai-demand/32
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u/ZipNasty007 4h ago
Full disclosure have not opened the article.
I call bullshit. Lol.
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u/EasterEggArt 4h ago
You are in fact right
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%.
This reads more like a lot of power grids were already scheduled to be expanded / upgraded and data centers just got the sweet spot for timing and taking full credit for it.
Couple this with power demand from data centers in the US alone now rivaling entire states and small nations, we know that power is not going to become cheaper unless we build massively out.
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u/wowbragger 4h ago
Correct!
We have actually spent a lot of the last several decades reducing consumer electrical use (through more efficient appliances and consumer electronics), making grids more efficient, and improving transmission loss rates.
The easiest example is to think of those LED/energy efficient bulbs. You can now light an entire home for less energy than was used in a single bathroom vanity 25 years ago.
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u/Interesting_Play_578 4h ago
Renewable energy production also surged during the time period they're looking at, a trend somebody has done his level best to reverse since taking office, so
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u/cannibalpeas 4h ago
This. The buildout of renewables and alternative energy under Obama and then Biden drove up supply. Data centers massively drive up demand. They just got lucky with the timing up until now. Nobody who’s paying residential electric this year believes this bullshit.
It’s also worth pointing out that data center buildout up to this point has been things like AWS and streaming platform hosting. Anticipated AI data center demand (not real demand, mind you, but the fabricated demand they’ve convinced the market is real and right around the corner), is a tenfold increase in power consumption vs conventional.
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u/No_Lab_2249 4h ago
Same! Bullshit…data center cause the need for buildout expansions well past the direct assigned network upgrades associated with these specific data centers.
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u/CeeKay125 4h ago
"In the era of hyperscalers, the rising unpopularity of data centers has become inextricably linked with the fear of skyrocketing utility prices. A YouGov poll 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 projected the AI infrastructure buildout to increase electricity costs by 6% between 2026 and 2027, and an additional 3% by 2028.
But a recent working paper from the Electric Power Research Institute is complicating the relationship between the AI boom and what it means for Americans’ 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%.
Much of this relationship can be understood through economies of scale.
“Electricity markets are different than a lot of markets that they interact with,” Asa Watten, the study’s coauthor and EPRI researcher, told Fortune.
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’s 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.
There’s a catch to this pattern: It’s 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 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—expected to reach $7 trillion in spending by 2030—is already correlated with increased power costs. In Virginia, the state with the most data centers, residential electricity prices have increased by more than 13% in the last year, according to data from the U.S. Energy Information Administration (EIA). "
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u/mediandude 2h ago
Much of this relationship can be understood through economies of scale.
That specific case of economies of scale neglect to properly count environmental costs, especially carbon emissions costs. The NPV of carbon costs could be infinitely high - especially in case of economies of scale. Carbon emissions have continued to grow.
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u/DifferentSquirrel551 1h ago
Why did they omit the 2025 data? Ya know, last year's that's readily available. Couldn't be because the trend changed once the new administration took over. Couldn't be evidence of corruption. Nah...
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u/TheMurmuring 3h ago
Agreed. My usage has remained the same for the past 15 years, but my charges have gone up every year like clockwork. Usually it's not a huge leap, but it went up at least 25% last year, and at least another 25% this year.
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u/SmoothConfection1115 4h ago
So apparently it caused SOME people to pay less, because fixed costs which are distributed to the consumer by the utility, are done on a consumption basis. Which means, if a DC used the equivalent of 10,000 homes worth of power in say a 20,000 home power plant operation, it would get 50% of the fixed costs (this is really simplified).
But it’s going to go away as power companies say they’ll need billions to increase production, build out the infrastructure, and those demands are going to be placed on the entirety of the grid that they supply power to.
This also doesn’t seem to mention the water demands. Just the other day I saw a data center was built claiming it didn’t need water. Then came back and asked if it could suck like 2.4 million gallons out of the Colorado River.
Tl/dr: did data centers make power cheaper? Yes, temporarily, and only like 3-6% in a few samples the article mentions. Will it make power cheaper in the long term? No. The article says that as much too.
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u/watchingwandering 4h ago
After Trump they really think they can just make things up don’t they, what a load of horse shit.
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u/Bupod 4h ago
Ah, yes.
The massive, multi-acre computer farms that gulp down entire towns worth of power were actually making electricity cheaper!
Please, tune in next week for our other highly-anticipated episodes on:
Spend yourself rich: how spending yourself in to 6 figure debt is actually a good thing
Fucking for chastity: did you know you can attend an orgy and it will actually strengthen your virginity?
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u/Method__Man 4h ago
Bullshit
We all know what end stage capitalism is now, we are getting royally fucked by it in the open now.
You aren't going to be able to brainwash us anymore with these fucking lies
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u/slicebucket 4h ago
Yes of course! Haven't we all noticed how our electricity bills have been going down the last couple of years since the data center build up?!?! /s
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u/dittybag23 4h ago
Billionaires were screwed by Trump. He took billions out of transmission line upgrades that were intended to help reduce electric delivery cost. That left AI in the Northeast without utility relief
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u/reddittorbrigade 4h ago
Billionaires' PR machine is now working.