Data Centers Contribute to High Prices as Energy Bills Electrify Local Politics
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The article discusses how data centers are contributing to rising energy costs, which is affecting local politics and consumers; the discussion revolves around the impact of data centers on energy prices and the role of renewable energy in mitigating these costs.
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"Contrary to these concerns, our analysis finds that state-level load growth in recent years (through 2024) has tended to reduce average retail electricity prices. Fig. 5 depicts this relationship for 2019–2024: states with the highest load growth experienced reductions in real prices, whereas states with contracting loads generally saw prices rise."
Day 5?
… and I heard on Friday that OpenAI is planning a data center 15 miles south of me. That can only make things worse.
We are struggling with this also -- with or without an incentive. The payback period is long. Makes sense if you think forward rates will be super-high. But people are quite aggressive with their forward rate estimates, yet super-liberal with the lifespan estimates.
I've dealt with enough appliance breakdowns to know all the tricks companies pull
- You have a 25 year warranty, but only on parts. The labor ends up costing more than an entire new system.
- You have a 25 year warranty, but only on labor. The parts ends up costing more than an entire new system, possibly because the parts are no longer made. Labor warranty is now useless and you need to buy a new system all over.
- You have a 25 year warranty on parts and labor, but the company declares bankruptcy and you have no warranty any longer.
- You have a 25 year warranty on parts and labor, but the company got acquired and the acquiring company "cant find your warranty details in their system". Regulators are powerless to actually help despite months of letters.
- You have a 25 year warranty on parts and labor, but a tree/hail falls on the house and they declare it out of bounds of warranty. You go through your home insurance, but they only cover current value, not replacement value. You buy a whole new system, only partially covered and start all over again.
- You have a 25 year warranty on parts and labor, but manufacturer blames the malfunction on improper installation, but the installation company is long-gone/retired/non-responsive/bankrupt. Possibly the Accord insurance form is fake also (how many people actually verify the insurance Accord is real?)
Been there, done that, on all the above. Eventually, your only religion is deferred maintenance because you know you get ripped off royally no matter what you do. We havent yet heard horror stories because these systems are new, but you'll hear all the above as time goes on, and people realize the actual life of their systems are far shorter than their payback periods.
But this is a warranty, and you have many panels. If they're all going to fail, they will fail sooner. If one fails or breaks eventually, even if it's not under warranty, replacing the panel is dirt cheap. Of course you need to replace it with an identical panel, so it makes more sense to buy extra panels and just assume some will die. But even if you paid for a replacement, that's already just $100-$200, and it'll probably be cheaper in the future.
So the warranty isn't really that important long-term. They're more important for the short term, and a Tier 1 solar provider's so reliable that you don't really need it anyway.
I could say that “rebuilding a car engine is dirt cheap” assuming I can do it myself.
1) Throw the "DC Disconnect" switch to de-power the panels. 2) Unscrew old panel from rails. 3) Disconnect MC4 connectors (with fingers). 4) Remove old panel and install new panel. 5) Connect MC4 connectors. 6) Screw panel into rails. 8) Throw "DC Disconnect" lever to re-power panels.
There's also a step 7 where the panel needs to be connected to the ground of the other panels, but with modern systems there's these metal clips that just clip onto the edges of adjacent panels to make the ground. Your system may be different but the ground is a pretty simple connection of metal to metal.
Here's a YouTube short showing it: https://youtube.com/shorts/fpyXHsZCb6M?si=JHoYfff2yz3ZsA9P
On a related note, I asked my AC guy if he knows any trustworthy solar installers. He told me that only crooks are in that business :)
https://www.globalpetrolprices.com/Brazil/electricity_prices...
It's basically this.
There is very little robust competition in the solar installation market, and a lot of the market is a principle agent problem on top of it.
Almost all these solar installation firms targeted at residential are more or less financial engineering companies selling loans wrapped up with solar as an afterthought. They make all their money on the financing end.
I started to look into getting a highly customized solar+backup power setup done at my place, and I just gave up due to how difficult it was to find anyone to throw any amount of money at even when I never hoped to see a payback on the project. I just wanted it to ride out potential power outages.
If you can DIY you can get payback in under 5 years for many locations. But it's just a lot to learn to do perfectly the first time.
I agree. It's like car dealerships who are more interested in getting you on financing.
by the time you may even get close to paying it off, its time for a new one.
really only worth if you just want to have solar and got a spare 5-6 figures to drop on it and wont miss that money.
hopefully this changes in the near future and it will be way more affordable.
I’m in Canada, in a tight valley that snows a lot.
7.8kw on the roof, even if I paid full price out of pocket it would be fully paid off in 13 years, and then I get $1000 a year of free power for another 20 or so years.
Even at full price it’s a total no brainer.
There is still time to complete a solar install yourself and get federal+state tax breaks. Call up your energy provider, get connected to their distributed generation department, and submit the forms/documentation/plans they require. Then you build your system, get it inspected, the utility approves it and completes the hookup. ChatGPT makes all this fairly easy. I can upload my forms and the process to GitHub if anyone wants to see the process for NY state.
The simplest grid-tied system is solar panels + roof-mounting equipment + microinverters + a combiner box + a disconnect switch. This is enough to send solar power direct to the grid, assuming your microinverter supports the standards your power utility requires. You can do a PV+ESS (battery) system, but it's a ton more expensive (even assuming you DIY). It should be cheaper to do grid-tied projects, but many power utilities now mandate new standards for grid-tied devices that only the expensive inverters support.
If you do off-grid (which I believe there's still some tax breaks for, depending), you can build a PV+ESS system much cheaper, as the off-grid equipment doesn't require the more expensive standards. We're talking $3.5k vs $9k for the same system.
It would also be cheaper if we supported balcony solar the way Germany does. A big concern of mine is that poor people and people in apartments (~40% of Americans live in apartments) won't have the ability to supplement their bills with solar. If all the people with money and land/houses switch to solar, and the poor can't, the poor'll be propping up a big portion of the energy sector themselves, which is unsustainable.
I will be getting 30% off from Federal for my solar+battery storage. From NY State, I get a personal income tax credit of 25% on solar (up to $5K), and I pay no state sales tax on solar or batteries. And NY has a 15-year property tax exemption for the whole solar generation setup of property tax.
There are additional credits in my state from NYSERDA that apply only to qualifying contractors, and I'm not a qualifying contractor, so I don't get those extra savings. But I don't need them, because I'm not paying anybody to do the work!
All this applies to renters as well, btw, you just need written permission from the landlord/homeowner.
Total energy consumption has peaked in Europe in 2021 while prices go up like they're building a data center in every european country every 60 minutes.
This is a good sign you’re missing something. Particularly when talking about a global and diversified commodity like energy.
Every company (currently) depends on atmospheric oxygen, that doesn’t make O2 the cause of energy prices.
Greed exists. It always has. Unless energy distributors have specifically become more greedy, recently and globally, the answer is somewhere else.
Something is either a diversified commodity subject to strict free market competition, razor thin margins and highly elastic supply/demand or it's a shithole of regulatory meddling and inelastic supply/demand with long feedback loops. Which it is depends on what political position you are trying to advance.
False dichotomy.
Also, the cause not being greed doesn’t mean it’s inexplicable. There is probably a problem that can be fixed. It’s just not wishing upon a star that people were less greedy.
Yeah, just tainting something with motivated reasoning without utilizing it solely is absolutely a thing.
Not my fault Schrödinger didn't leave room for all the nuance of market conditions.
Not to say I agree with "hurr durr it's greed". Usually if something is inexplicably wacky and fucked up it traces back to Nth order effects of regulations, not necessarily in the same jurisdictions.
> It increasingly looks like a coordinated effort to extract as much revenue as possible from consumers before widespread adoption of solar power shifts the balance.
That statement isn't wrong, but increased power prices on consumers through socializing the costs of privatized benefit data centers is the mechanism for this. Data centers are a tax on consumers via their electric bills.
Citations:
Data Center Demand Fuels Surge in Electric Costs - https://www.thesandpaper.net/articles/data-center-demand-fue... - October 8th, 2025
AI Data Centers Are Sending Power Bills Soaring - https://www.bloomberg.com/graphics/2025-ai-data-centers-elec... - September 29th, 2025
How AI infrastructure is driving a sharp rise in electricity bills - https://www.pbs.org/newshour/show/how-ai-infrastructure-is-d... - September 5th, 2025
Data centers will cause higher electricity prices, study finds - https://www.axios.com/local/raleigh/2025/08/28/data-centers-... - August 28th, 2025
As electric bills rise, evidence mounts that data centers share blame. States feel pressure to act - https://apnews.com/article/electricity-prices-data-centers-a... - August 8th, 2025
CMU: Data Center Growth Could Increase Electricity Bills 8% Nationally and as Much as 25% in Some Regional Markets - https://www.cmu.edu/work-that-matters/energy-innovation/data...
https://www.datacenterwatch.org/report
Energy prices are also flat in Europe, due to renewables pushing out volatile fossil fuels.
Ember Energy: European electricity prices and costs - https://ember-energy.org/data/european-electricity-prices-an... (updated daily)
Household electricity prices in 1st half of 2025: -0.5% - https://ec.europa.eu/eurostat/en/web/products-eurostat-news/... - October 29th, 2025
Ember Energy: Decoupled: How Spain cut the link between gas and power prices using renewables - https://ember-energy.org/latest-insights/decoupled-how-spain... - October 2nd, 2025
This statement from the EU is not just irrelevant, it’s deliberately misleading. Claiming a modest –0.5% change after a staggering 40% price surge, while oil and gas prices remain near 2019 levels and solar and wind capacity has grown tenfold, feels like a slap in the face to consumers. And yet, you’re amplifying this technically true (but deeply deceptive) narrative because it conveniently props up a flawed argument.
The above is crystal clear in the graphics in my citation above "Ember Energy: European electricity prices and costs."
Additional citations:
EU expects to add record renewable capacity in 2025, industry sees headwinds - https://www.reuters.com/sustainability/boards-policy-regulat... - April 10th, 2025
> EU countries are expected to add 89GW of new renewable energy capacity in 2025, including 70GW of solar and 19GW of wind, according to Commission projections shared with Reuters. The projections are based on industry data.
The White House’s Bet on Fossil Fuels Is Already Losing - https://www.bloomberg.com/opinion/articles/2025-10-28/white-... | https://archive.today/vpvch - October 28th, 2025
> US financial markets are favoring renewable energy over fossil fuels, with global investment for new renewable energy development reaching a record $386 billion during the first half of 2025.
> Revenue forecasts show a widening dichotomy between clean and dirty industries, with renewables expected to report 16% sales growth next year and 21% in 2027, while traditional energy companies report 1% and 6% sales growth.
> Global renewable power is forecast to increase by 4,600 gigawatts by the end of the decade, an amount equivalent to adding the generation capacity of China, the EU and Japan. (my note: 4 years to add 4.6TW of renewables globally)
> Even as the US and European Union recently increased their reliance on coal, solar dethroned the fossil fuel mainstay last year, becoming the world’s most installed energy generation technology according to BloombergNEF’s 2025 Power Transition Trends report. “In 2015, solar power seemed far from overtaking coal, constrained both by scale and economics,” BloombergNEF said in report this month. Yet, within a decade, solar costs have fallen so dramatically that the dynamic has entirely reversed. Solar is now two times cheaper than the fossil fuel.” So-called green energy is the lowest-cost and quickest-to-deploy power generator in the US, even without incentives, according to Lazard Inc.
Lazard’s Levelized Cost of Energy+ (LCOE+) - https://www.lazard.com/research-insights/levelized-cost-of-e... - June 2025
(enough sunlight falls on the Earth in 30 minutes to power humanity for a year, and we're fighting over ancient sunlight pumped from the ground; why? we already solved fusion, just at a distance using the sun and batteries; 1GW of solar is installed globally every 15 hours as of this comment)
They could wave a legislative magic wand and stop subsidizing heat pumps and rooftop solar (and everything else hidden in the transmission and distribution fees on their bills) for the HN tax brackets and reap at least somewhat cheaper prices basically overnight.
Wholesale increased 30% YoY 2025 over 2024 but household didn't.
Realistically we should compare to 2019 (pre-Covid, pre-inflation, pre-Ukraine war).
Many individual EU govts implemented retail caps, (sales) tax cuts, and transfers. Where is this summarized at-a-glance, by country, by year? Anything better than:
eurostat: "Electricity price statistics" https://ec.europa.eu/eurostat/statistics-explained/index.php...
"Winners and losers from the energy crisis: Policy lessons from the Iberian electricity market" - Fabra, Leblanc, Souza (2025) https://cepr.org/voxeu/columns/winners-and-losers-energy-cri...
I'm not sure it's really a correct mental model to put 50+ years of lack of investment maintaining and expanding transmission and grid capacity onto the industry that laid that fact bare. From where I stand and the underlying studies/reports I've personally read the root cause always seems to be we're running out of power on a grid built by the Greatest Generation and more or less zero work has been put into expanding anything since. There were plenty of people sounding alarm bells a decade ago before the latest datacenter boom.
Then you get into NIMBY stuff, pie in the sky wishful thinking re: dispatchable vs. intermittent power generation, etc.
In the end if we want wealth, we need industry. Industry needs cheap and abundant power to be competitive - AI datacenter or Aluminum smelter. Energy consumption correlates very strongly with wealth, and we've spent decades in the margins messing around with efficiency gains vs. actually investing in anything substantial. When your power company is willing to give you a credit for a more efficient appliance so they don't have to upgrade the grid to your neighborhood you know things have jumped the shark and we are in malinvestment territory.
I certainly agree with the argument that the datacenters might not end up panning out as profitable investments for society, but I'm at least hopeful that when the dust settles we'll actually have augmented our electric grid and finally started to take that looming problem seriously. We might be left with something useful that lasts another 3 generations when all said and done.
We were going to get here either way with population growth and older power generation facilities not being replaced faster than they are reaching end of life. Datacenters simply brought it forward maybe a decade or so. Eventually you run out of the previous generation's energy investments.
Well yeah, you don't need to look further than Econ 101 and supply and demand. If demand goes up, prices go up.
The real problem is that the gains from the new demand don't end up fairly distributed, which is bad but not really directly related to the discussion.
Americans have coasted too long on other people's infrastructure investment. It's basically run out. Time to pay the piper or watch our quality of life decline.
I firmly believe datacenters are simply the scapegoat de-jour. If this buildout hadn't happened it'd still be EVs or "air conditioning use in the city" like it was beforehand.
It's coming for us either way. At least this way there is an industrial user subsidizing a portion of grid modernization and energy generation tech.
I agree that wealth distribution is a problem. But I come from a "there needs to be wealth to distribute to begin with" standpoint. Degrowth isn't the way.
Supply goes up for a price and it's called capex, that cost wouldn't be there without new datacenters.
> Americans have coasted too long on other people's infrastructure investment. It's basically run out.
That's such an egregious inversion of the truth. It would be true if the companies building data-centers were building power plants and transmission lines which the population was allowed to use for the cost of operating expanses - after all capex and loans were payed off by these companies.
The reality is the exact opposite of that - the public is shouldering all of the capex and the new AI overloads want to pay for the opex only.
> Time to pay the piper or watch our quality of life decline.
They are even ready to issue threatening ultimatums if you disagree... as if agreeing would lead to a different outcome.
Why do we want wealth when it is only going to the wealthiest? AI data centers benefit Big Tech, its employees, and its shareholders. So, who is "we"? I believe I can make the argument that the majority of Americans do not want this, only a privileged minority (ie those getting wealthy from this current hype cycle).
Poll: American voters don't want data centers built in their communities - https://www.thecentersquare.com/issues/energy/article_d5b564... - July 2nd, 2025
> Energy consumption correlates very strongly with wealth, and we've spent decades in the margins messing around with efficiency gains vs. actually investing in anything substantial. When your power company is willing to give you a credit for a more efficient appliance so they don't have to upgrade the grid to your neighborhood you know things have jumped the shark and we are in malinvestment territory.
No longer true.
https://ourworldindata.org/energy-gdp-decoupling
If AI data centers want power, they should be charged a painful premium for it, paid out of the pockets of Big Tech building it. They have the resources, clearly, from the very obvious capital flows. Meta has issued its largest bond offering ever, $30B, for its Hyperion project in Richland Parish, Louisiana. Because when the bubble pops, we're all going to be left holding the bag ("socializing the losses"). We should not all have to suffer higher electrical prices for the benefit of Big Tech and their shareholders. They can pay up for the necessary power infrastructure if they want the gains they're chasing.
>The Economist has adapted a model of state-level retail electricity prices from the Lawrence Berkeley National Laboratory to include data centres (see chart 2). We find no association between the increase in bills from 2019 to 2024 and data-centre additions. The state with the most new data centres, Virginia, saw bills rise by less than the model projected. The same went for Georgia. In fact, the model found that higher growth in electricity demand came alongside lower bills, reflecting the fact that a larger load lets a grid spread its fixed costs across more bill-payers.
https://www.economist.com/united-states/2025/10/30/the-data-...
> Data center load drove up revenue in the PJM Interconnection’s last capacity auction by $7.3 billion, or 82%, to $16.1 billion, according to the grid operator’s market monitor.
> Combined with PJM’s previous capacity auction, existing and forecast data center load resulted in $16.6 billion in capacity auction revenue, or about half of the $30.8 billion in revenue from the two auctions, Monitoring Analytics said in a report released Wednesday.
> “Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices,” the market monitor said.
> “The current conditions are not the result of organic load growth,” it stated. “The current conditions in the capacity market are almost entirely the result of large load additions from data centers, both actual historical and forecast.”
https://en.wikipedia.org/wiki/PJM_Interconnection
AI Isn't the Only Thing Pushing Up Electricity Bills. (But It's Mostly AI) - https://news.ycombinator.com/item?id=45856862 - November 2025
https://www.apolloacademy.com/electricity-prices-have-grown-...
That statement seems to be upside-down. Energy factors into the cost of almost every other product, that is, the rise of energy prices causes much of the inflation elsewhere, which is then reflected by the CPI.
Also notice, 2022 is when the data-center and AI boom started, that too fits the premise of their culpability.
But then we live in a bizarre world where inflation is good, and the price of everything rising together is just wholesome and natural.
And while it's certainly an unpopular concept to present, electricity right now is a whole lot cheaper (on average, in the US) when viewed through an inflation-tinted lens than it has been at many times in the past.
I find that FRED (from the Federal Reserve Bank of St. Louis) is pretty useful for visualizing that kind of data, in part because it shows folks exactly what went into producing the chart. The citations and any maths are all included for inspection (see the "Edit Graph" link). It's hard to use FRED to present information disingenuously: It simply is what it is.
For instance, here's a chart with one line showing inflation-adjusted electricity expense, in the US, over time: https://fred.stlouisfed.org/graph/?g=1NyKY
And here's one that also adds several lines with raw data: https://fred.stlouisfed.org/graph/?g=1NyNc
(wherein: It can be plainly seen that the 1980s were very dark times indeed, and the first ~half of the 1990s weren't so great either. We're currently somewhere around turn-of-the-millennia in terms of how much our electric bill hurts compared to how much everything else hurts.
(And none of this should be construed to mean that I'm ecstatic about paying my power bill or something. Everything is fuckin' expensive these days -- including electricity.))
For example, Massachusetts rates are way up because New England politicians have spent more than a decade fighting natural gas infrastructure, especially pipelines that would bring cheap North American gas vs. LNG that is in short supply post-Russia/Ukraine war.
At the same time, MA politicians created the “Mass Save” program that’s effectively a giant boondoggle where utility ratepayers are subsidizing fly-by-night “energy efficiency” contractors who have no incentive to be efficient at all.
This problem is unrelated to datacenters. The datacenter boom has created demand in markets outside New England, which is seeping into New England. It only got compounded by lack of natural gas.
> At the same time, MA politicians created the “Mass Save” program that’s effectively a giant boondoggle where utility ratepayers are subsidizing fly-by-night “energy efficiency” contractors who have no incentive to be efficient at all.
Mass save is actually a great program. Mass houses are old, creaky, and lacking insulation. Mass save let these things be upgraded at a lower price burden to the masses. If you are talking about heat pumps, heat pumps can have backup furnaces - you could use natural gas if you wanted. The idea behind a heat pump was to have it work with solar, wind, and other low cost energy sources.
Then trump came in and shot all these other sources at gunpoint. And you are seeing it in your bills.
Who were they trying to pander to by doing that? Who's votes did the politicians expect to reap?
I feel like the goddamn goose in the meme.
They did that stuff because well off white collar jerks with no problems thought it sounded good. And now, as usual, the rest of society has to pay for it.
Meanwhile everybody's electric rates are spiking, some dramatically so. There isn't much new power generation being built here. Amazon is taking over an old US steel plan that had a dedicated gas generator, and MS supposedly has invested in restarting TMI's non-melted down reactor - i'll be amazed it that ever produces a drop of power though I'm sure billions will be spent on it.