New study finds data centers lower electricity costs in US

The prevailing narrative around data centers, that they’re power-hungry monsters driving up everyone’s electricity bill, is running into a wall of inconvenient data. Multiple recent studies have concluded there is no significant connection between data center growth and rising electricity prices in the US. In some cases, the opposite appears to be true.

The numbers tell a different story

The Institute for Energy Research published an analysis showing that the ten states with the highest number of data centers averaged electricity prices of 14.46 cents per kWh. States without major data center concentrations? They averaged 14.39 cents per kWh.

The Pearson correlation coefficient came in at -0.053, which is about as close to zero as you can get without actually being zero. In plain English: knowing how many data centers a state has tells you almost nothing about what its residents pay for power.

The Center for Jobs took it a step further with a regression analysis. Their finding was that states where data centers consume a higher share of total electricity actually tend to have rates about 1.1 cents per kWh lower than peers. Not higher. Lower.

Energy + Environmental Economics, known as E3, published a whitepaper reinforcing the pattern. Their research found that a typical Amazon data center can generate a net revenue surplus of $3.4 million for the utility company serving it. That surplus doesn’t just vanish. It gets spread across the utility’s customer base, effectively subsidizing residential bills.

E3 also pointed to Texas and Virginia, two of the nation’s largest data center markets, as states that experienced among the smallest electricity rate increases during the period studied.

Why data centers might actually help

A huge portion of utility costs are fixed: transmission lines, substations, transformers, the infrastructure that exists whether anyone uses it or not. When a data center plugs into the grid and starts consuming power at a steady, predictable rate around the clock, it spreads those fixed costs across more kilowatt-hours. Everyone’s per-unit cost drops.

The Lawrence Berkeley National Laboratory found supporting evidence for this dynamic. States that experienced the largest data center demand growth between 2019 and 2025 generally saw electricity prices decrease. Meanwhile, states where overall electricity sales declined saw price increases averaging 58%, compared to just 13% in states with growing demand.

So what’s actually driving electricity costs up

If data centers aren’t the culprit, what is? The research points to aging infrastructure, necessary grid upgrades, and regulatory mandates as the primary drivers of rising electricity prices.

What this means for investors

The utility revenue angle is particularly interesting. If a single Amazon data center generates a $3.4 million net surplus for its utility partner, the economics for utility companies are compelling. That creates alignment between data center operators and the utilities that serve them, which historically has been the most important relationship for getting new facilities approved and connected.

The risk to watch is whether the relationship holds at scale. Current data reflects a period when data centers, despite their growth, still represent a relatively small share of total US electricity consumption. Whether the cost-spreading math still works when data centers consume a much larger slice of total generation is an open question that the current studies, by definition, cannot answer.

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