Data centers have historically contributed to lowering retail electricity prices, even as fears rise over a $7 trillion AI infrastructure buildout potentially driving up costs. A recent Electric Power Research Institute (EPRI) working paper found that between 2015 and 2024, doubling data center capacity corresponded with a 3.5% decrease in average retail electricity prices, with some states seeing reductions near 6%, according to fortune.com.
The EPRI study analyzed data from the Federal Energy Regulatory Commission and the U.S. Energy Information Administration, revealing a causal link between increased data center demand and lower electricity costs. Asa Watten, an EPRI researcher and coauthor of the paper, explained that electricity markets differ from typical commodity markets, with economies of scale playing a key role in this dynamic. This counters earlier projections by Goldman Sachs, which forecasted a 6% rise in electricity costs between 2026 and 2027 due to AI infrastructure expansion.
The findings challenge public concerns highlighted by a YouGov poll showing over two-thirds of Americans expect electricity prices to rise near new data centers. While the AI boom is driving massive data center construction, the research suggests that up to 2024, these facilities have helped reduce retail electricity prices. This contrasts with fears that the AI-driven buildout will exacerbate utility costs, underscoring the complex interplay between technology infrastructure and energy markets.
The EPRI paper’s analysis covers data through 2024, providing a benchmark for assessing the impact of ongoing AI infrastructure investments. Goldman Sachs’ projections for rising electricity costs begin in 2026, marking a critical period for monitoring how expanding data center capacity will influence retail electricity prices in the near term.