alt Hacker NewsData centers have hiked electricity prices on the public by $23B
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There are a few things going on at the same time that mean that electricity cost might actually go down.
The reasons for that are complex but have to do with how electricity pricing works. In many markets the price includes a lot of taxes, fixed cost for providers and infrastructure. Generation is only a minor cost. And on top of that the prices are set in a way that isn't really that flexible.
Infrastructure utilization is a very important here. Grid operators are very conservative with their infrastructure. They want to ensure there's enough to handle the worst case. That means there are a lot of assets that are nowhere near 100% utilized (e.g. cables and long distance transmission). It also means they are very inflexible serving new demand like data centers.
Adding batteries as energy buffers enables a lot better utilization of all these assets. That enables more revenue for the same infrastructure cost. Electricity prices can actually go down if you do that right. With renewables, there is very low marginal cost for generation. It's all infrastructure cost. Anything that improves infrastructure utilization enables more customers to have power that then share the infrastructure cost.
Data centers that are currently powered by things like on site gas turbines are not being very cost efficient. There's an obvious incentive for hyper scalers to invest in infrastructure that will lower their cost. They have access to many billions. They are spending on anything that will get them energy. They are desperate to spend. And they are completely bottle necked on grid operators that are being very conservative. Hence the expensive side hustle with gas turbines. There's a big opportunity here for massive investment in better grid infrastructure. That wouldn't necessarily be payed for by consumers. But they would still benefit from better infrastructure.
The key is unlocking these investments to happen.
> But what if the power company needs to upgrade the substation to handle the increased needs of the data center? Or secure additional sources of electricity? In these cases, the investments are part of the electricity grid that everyone uses. These costs will likely be shared among all customers.
Okay but this is a policy choice. It doesn’t have to be that way.
It's important to ground the increase in raw numbers.
The total revenue for electricity generation was $514b in 2024. So this was a 4-5% increase in costs. And if it is being invested in better generation and our aging infrastructure, that seems fine.
This just isn't true. On balance, data centers are turning out to be more like the "anchor tenant" of the power grid, financing improvements for everyone.
Overview article with links to actual studies: https://cityjournal.substack.com/p/data-centers-arent-raisin...
Utility providers won't build fiber connectivity to homes and make massive profits ($50+/month), but they'll build unnecessary infrastructure for AI DCs and make people pay for it. As long as we do things to serve the super rich, everything is okay.
Personally, some of my electricity bills will soon be rising because of changes to how rates are computed. The added "demand charge" will penalize customers that have variable loads, while benefiting data centers with relatively constant loads.
Also IMHO, we are building way too many data centers right now. It reminds me a lot of the Y2K dot.com crash, and all of the residual dark fiber.
I spotted this article today that claims it's all in our imagination.
https://www.city-journal.org/article/data-centers-arent-rais...
Isn't this the classic overcapacity leads to lower prices that also represses investments that would increase capacity. But those lower prices also stimulate new demand that lead to higher prices...which then motivate investments that increase capacity?
Perhaps I'm just spoiled because I live in the PNW, where are best use for overcapacity was to ship power off to California. But in the past, cheap hydro attracted aluminum production that then attracted also attracted a whole airplane production industry.
I think most people are just debating whether the extra demand generated by AI is worth it, they weren't necessarily debating the same thing when it came aluminum or airplane production (albeit in the 1930s).
What is the increase in jobs/GDP for those communities that have paid more in electricity? A lot of these data centers are built in places with declining population and zero economic prospects for locals within their communities so they're a huge boon.
Isn't this the same as saying "utility regulators delaying connecting new power to the grid hiked electricity prices on the public by $23B?"
When my apples are expensive, I don't generally grumble about all the demand from pie makers. If they demand more apples, new suppliers should come in to restore the price, right?
Failures to allow faster generation/hookup rollout have suppressed supply increase relative to demand increase
Isn't almost all of the datacenter build out for inference, rather than training? If so, what's the issue? If the electricity demand is coming from actual use, then why are people getting mad at datacenters or AI companies, rather than the actual people driving the demand? It's like getting mad at Amazon for how much they increased fuel prices, which they surely did, given all the fuel that their trucks/planes burn. Or getting mad at some global food conglomerate for making açaí berries[1] more expensive, but there's a global craze for them and the conglomerate is just catering to that demand.
[1] or whatever other "superfood" that explodes in popularity
Data centers should at the very least build their own renewable energy generation. It would set the right incentives in place and encourage investment in clean energy generation solutions. It would also present a very compelling problem to direct all that new AI compute towards solving.
Maybe what they're doing in Oregon with POWER Act hikes on data centers is the way:
Oregon approves PGE’s 29.7% rate hike for data centers under landmark law
https://www.opb.org/article/2026/07/07/oregon-data-center-ge...
Untrue headline.
PJM’s market monitor estimates data-center demand added $23.1 billion to regional wholesale capacity costs across three delivery years through 2028.
It is crazy to me that somehow customers pay to cover some of the costs for datacenters. I thought everything was usage based, but apparently that is not the case everywhere and it’s a shared burden? What kind of weird crap is that
Every tech company building out datacenters would pay in a heartbeat to add commensurate power to the grid. The cost is not an objection.
The problem is, there are insane and dumb regulatory barriers to adding power plants or interconnects. THESE ARE THE SAME PROBLEMS FACTORIES FACE WHEN RESHORING PRODUCTION, you should treat datacenters as the face of reindustrialization. Instead of complaining about using resources, we need to focus on solving our inability to provide infrastructure needed to support economic growth.
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This $23B number that gets thrown around is not the increase to the public. The wording in the referenced report is
> Based on actual auction clearing prices and quantities and uplift MW, inclusion of existing and forecast data center load growth resulted in a combined total increase in capacity market revenue for the 2025/2026 BRA, the 2026/2027 BRA, and the 2027/2028 BRA of $23,100,955,341.
This is the increase in revenue to PJM from adding datacenter customers, and includes both the amount that datacenters paid as well as the amount that other customers paid due to higher prices from datacenters. So Fortune calling it an increase to "the public" means that they didn't read the report they are using as their source and are probably just repeating what they thought someone else meant.
Bloomberg in the past worded it as "data centers will add at least $23 billion to customer bills" in April and "added a minimum of $23 billion to customer bills" in February. Which while technically correct (datacenters are customers) seems meant to be misleading. And now that's the number that's getting thrown around as the increase to "the public".
The part I don't get is that the journalists could just give the actual number for the quantity that they are referring to (the amount that non-datacenters paid due to higher rates due to datacenter loads): when I calculated it a few months ago I think it was something like $16 billion rather than $23 billion. I feel like the story would have the same impact if the headline number was $16B as $23B, but $16B has the benefit of not being a misrepresentation of the situation.
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Also I would definitely recommend checking out the PJM BRA report. It's a bit dense but not too hard to follow, and my personal takeaway was that the PJM market is just very dysfunctional and they are blaming the datacenters instead. I thought SemiAnalysis had a good analysis of it: https://newsletter.semianalysis.com/p/are-ai-datacenters-inc...