Linus Tech Tips Discussion

 Data centers are a small factor in rising electricity rates. Summary The Electric Power Research Institute has found that rising data center demand has decreased electricity costs between 2019 and 2024. While the recent jump in demand has complicated the situation, correct state policy can negate the ill effects on consumers.   Quotes Quote from 2019 to 2024 the average residential customer lived in a state where data center capacity grew 160%, which caused their rates to fall by 6%   Quote it is clear that states that maintained relatively lower average prices saw more data center capacity additions compared to states with large nominal price increases. My thoughts It appears that the increase in electricity demand incentivizes operators to build out more capacity. That additional capacity is created to meet current and future demand. Since that additional capacity exists in the interim, high-load periods don't have to use more expensive forms of electricity generation, and rates fall accordingly. If this cycle perpetuates, as it has been over the last few years, electricity rates should continue to fall. However, short term effects do complicate the matter, since the demand has surged to such a level that suppliers can't respond quick enough, and are forced to increase rates. This can be solved by forcing data centers to pay for long-term electricity contracts and increased buildout expenses, as long as regulators don't stall or complicate their efforts for environmental reasons, which they have in states like California and New York. Also, many of the electricity hikes are in response to environmental policies such as those implemented in California, a state which saw below average data center build-out in the period stated. Quote Of note is that the state with the highest proportionate residential price change (California) experienced low data center growth relative to sectoral demand, while the state with the most data center growth (Virginia) saw residential price changes close to the average.   Sources https://arxiv.org/pdf/2606.19777 https://cityjournal.substack.com/p/data-centers-arent-raising-your-power