A new EPRI study finds that rising demand from data centers does not automatically drive up electricity prices. When large users pay their full share and planning happens early, higher load can actually help spread fixed grid costs and stabilize rates.
More Data Centers Don’t Automatically Mean Higher Electricity Bills
Rising power bills are often blamed on data centers and other large industrial users. A recent study from the Electric Power Research Institute (EPRI) shows the relationship isn’t automatic.
Electric grids have high fixed costs. Power plants, transmission lines, and substations must be paid for whether demand rises or falls. When usage increases, those fixed costs are spread across more kilowatt-hours. Under the right conditions, that can stabilize or even reduce average prices.
What the Data Shows
EPRI analyzed state-level data from 2019 to 2024.
Demand Growth and Prices
States with faster demand growth generally saw smaller electricity price increases. Some even saw prices decline. States with flat or falling demand experienced larger increases. On average, a 10% increase in electricity demand was linked to about a 0.6-cent per kWh drop in prices.
The reason is simple: when usage grows, costs are distributed more widely. When usage stalls but system costs keep rising, per-kWh prices increase faster.
Where It Breaks Down
This model only works if large new users pay for the grid upgrades they require and stay connected long enough to justify those investments.
Cost Allocation Risk
If expensive upgrades are shared across all customers, or if large users reduce demand or leave before costs are recovered, other ratepayers absorb the difference.
Regional Variation
Outcomes also vary by state. In regions where serving new demand requires major transmission or generation investments, prices can still rise even with growing demand.
What Needs to Happen
EPRI highlights three priorities: plan before large loads arrive, design rates so big customers pay incremental costs, and ensure large users can shift or reduce demand during peak periods.
The study period reflected modest demand growth. Future increases driven by AI, electrification, and industrial expansion could be much larger.
More demand does not automatically raise prices. Policy design, planning, and cost allocation determine the outcome.
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