Data Centers Explain About 4% of US Home Power Price Growth, Study Finds

what happened

A new working paper by researchers at the Wharton School and Harvard Business School, cited by TheEnergyMag, puts the contribution of data centers at roughly 4% of the rise in US residential electricity prices between 2020 and 2025. For the average utility studied, new facilities added about $1.70 per megawatt-hour to household rates, or around $1.70 a month for a home using 1,000 kilowatt-hours. Industrial customers were hit harder, with an increase of about $5.40 per megawatt-hour, close to 16% of the observed rise.

The authors examined 385 large facilities across 42 utilities and compared them with weighted control groups, since developers tend to choose sites where power is already cheaper. Sites run by Amazon, Google, Meta and Microsoft showed no statistically clear effect on home bills, while the impact came mainly from third-party providers, although that gap is statistically weak. The study stops in 2025 and measures data center capacity rather than electricity used specifically for AI.

Pressure may be building: the effect from facilities added since 2022 was larger, and PJM's auction for the 2028–2029 delivery year cleared at its price ceiling while falling 6,831 megawatts short of its reliability requirement.

why it matters

For markets, the findings weaken the argument that AI demand is already driving household bills sharply higher, but they highlight how cost-recovery rules for new large customers will shape outcomes. The capacity shortfall in PJM suggests that bill pressure could grow even if the historical impact has been modest.

market impact

US power utilities: data center demand adds modestly to home bills, while tight PJM reserves push up capacity costs

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