AI data center ‘frenzy’ is pushing up your electric bill — here’s why

The data centers that power the artificial intelligence revolution are driving up electricity prices for households — and price relief may not be coming anytime soon, according to energy experts.

Residential retail electricity prices in September were up 7.4%, to about 18 cents per kilowatt hour, according to the most recent data from the Energy Information Administration.

Electricity prices closely tracked inflation from 2013 to 2023, but will likely outpace inflation at least through 2026, according to an EIA forecast from May. Some regions will be hit harder than others, it said.

Energy experts and economists point to electricity-hungry data centers that underpin AI projects as a key reason for the price inflation.

These data centers are vast warehouses of computer servers and other IT equipment that power cloud computing, artificial intelligence and other tech applications.

The basic reason for rising prices: Electricity demand — including actual and forecasted demand — is outstripping new supply.

Data centers are expected to consume anywhere from 6.7% to 12% of total U.S. electricity by 2028, up from 4.4% in 2023, the U.S. Department of Energy estimated in December 2024.

John Quigley, senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania, pointed to the “data center frenzy” as the primary driver of higher electricity prices for households.

“They’re pretty much the whole boat when it comes to increases in electricity demand,” Quigley said.

“It’s going to get worse,” he said.

To be sure, data centers aren’t the only contributor to higher electricity prices, experts said.

But escalating electricity prices “can strain household budgets … undermine economic competitiveness … and hinder the electrification of energy systems,” researchers at the Lawrence Berkeley National Laboratory wrote in a recent analysis.

Rising electricity prices for U.S. households also come as politicians continue to leverage the affordability theme to garner support.

New Jersey governor-elect Mikie Sherrill and Virginia governor-elect Abigail Spanberger, both Democrats, promised to lower electricity bills for state residents. During her campaign, Spanberger said she wants to “make sure data centers don’t drive up energy costs for everyone else in Virginia.”

While on the campaign trail, President Donald Trump had also pledged to cut electricity and energy prices in half within his first 18 months of office.

“Affordability remains [the] most salient issue in…