Data centers were actually making electricity costs cheaper, but the $7 trillion buildout with no guaranteed AI demand is threatening the trend | Fortune

Data centers were actually making electricity costs cheaper, but the $7 trillion buildout with no guaranteed AI demand is threatening the trend, according to an Electric Power Research Institute working paper. Researchers using Federal Energy Regulatory Commission (FERC) data and U.S. Energy Information Administration retail revenue from 2015 to 2024 found a causal link between data center demand and electricity prices. For every doubling of data center capacity, average retail electricity prices fell by 3.5%, and statewide declines averaged about 6%. The relationship is attributed to economies of scale and more kilowatt-hours dividing fixed generation costs. However, the pattern may not hold if AI-driven demand fails to materialize. PJM projected a $6.3 billion increase in consumer electricity costs over the next three years, largely tied to data center power demands, while Virginia saw residential prices rise more than 13% year over year.