Data Center Growth Could Increase Electricity Bills 8% Nationally and as Much as 25% in Some Regional Markets
By: Michael Blackhurst, Cameron Wade, Joe DeCarolis, Anderson de Queiroz, Jeremiah Johnson, Paulina Jaramillo
New modeling from the Open Energy Outlook Initiative shows that data center and cryptocurrency mining growth through 2030 could increase average U.S. electricity generation costs by 8% and greenhouse gas emissions from power generation by 30%.
Why it matters: Absent policy action, this increase in demand for electricity generation could lead to dramatically higher electricity bills for consumers and undermine the nation’s clean energy goals.
For example, capacity market prices in the nation's largest grid operator (PJM) exploded in December 2024, from $30 to $270 per megawatt-day (MW-day), a ninefold rise that will increase bills for 67 million customers across 13 states.
Catch up quick: Traditional utility planning assumes predictable 1-2% annual demand growth over decades, but data centers are driving regional growth rates of 20-30% annually. This mismatch between conventional planning timelines and demand growth has exposed limitations in capacity planning practices and increased short-run electricity generation costs, with some markets heavily utilizing older and more costly fossil-fuel generators in the short run.
What we did: The Open Energy Outlook (OEO) Initiative, a collaboration between Carnegie Mellon University and North Carolina State University, modeled the energy and emissions implications of expected data center and cryptocurrency mine growth. The analysis models the infrastructure, economic, and environmental implications under current policies and recommends policy tools that could ensure the grid accommodates this expansion while protecting consumers and climate goals.
What we found: Recent model results show that rapid data center demand growth increases generation from aging and expensive coal-fired power generators. In contrast, Texas utilizes more wind generation through targeted transmission investments. These contrasting outcomes underscore that data center growth will drive different regional outcomes.
Other key findings from the modeling include:
- Regional cost surge: Central and Northern Virginia face projected 2030 electricity cost increases exceeding 25%, the highest regional increase in the model.
- Coal gets lifeline: More than 25 GW of aging coal plants otherwise scheduled for retirement would continue operating primarily to serve data center demand.
- Emissions spike: Power sector emissions could increase 30% compared to scenarios without data center growth, reaching 275 million metric tonnes of CO2 annually by 2030. That matches the entire annual carbon output of France.
- Carbon leakage: Virginia's data center growth drives increased fossil fuel use in nearby states like Ohio, Pennsylvania, and West Virginia, potentially undermining state and regional climate goals.
Policy takeaways: There are several state and federal policy strategies to consider that may mitigate the effects of this expected growth, such as:
- Fair cost allocation: Create new customer classes and revenue sharing mechanisms to ensure large users rather than families pay for elevated infrastructure costs.
- Strategic siting incentives: Incentivize data center expansions in renewable-rich regions and away from areas dependent on fossil fuel generation.
- Transmission acceleration: Improving permitting and cost allocation for transmission lines connecting renewable resources to demand centers.
- Demand flexibility requirements: Incentivize or require energy efficiency or load management during peak periods or emergencies.
What's next: Data center and crypto mining electricity demand is projected to grow 350% by 2030. Without intervention, the pattern seen in PJM — massive price spikes followed by political backlash — will become more frequent. Continued investment in energy systems modeling resources like those maintained by the Open Energy Outlook Initiative can help identify policy interventions that balance the benefits and costs of increased data server activity.
The bottom line: The digital infrastructure boom is outpacing our electricity system’s ability to respond. Data centers offer potential benefits but risk locking in higher emissions and driving up prices for households without proactive and coordinated planning. Policymakers must act now to align infrastructure investment and regulation with this demand surge.