Audrey Streb
DCNF Energy Reporter
Electricity costs are surging as America’s power needs climb, driven in part by the growing demand from power-hungry artificial intelligence (AI) data centers, according to data from the Energy Information Administration (EIA).
Residential electricity prices have risen nationwide by about 6.5% between May 2024 and May 2025, according to EIA data. The build out of power-hungry data centers needed to sustain AI development in the coming years is expected to put significant upward pressure on U.S. electricity demand, which could drive prices higher yet if available supply does not grow quickly.
“If we are going to keep the lights on, win the AI race, and keep electricity prices from skyrocketing, the United States must unleash American energy,” Energy Secretary Chris Wright said in July as the Department of Energy (DOE) released a report on the U.S. electricity grid that states that blackouts could increase by a factor of 100 by as soon as 2030 if America fails to replace aging energy infrastructure. “In the coming years, America’s reindustrialization and the AI race will require a significantly larger supply of around-the-clock, reliable, and uninterrupted power.” (RELATED: Blackouts Coming If America Continues With Biden-Era Green Frenzy, Trump Admin Warns)
Only five states saw a drop in electricity prices from May 2024 to May 2025, including Nevada, Hawaii, Iowa, North Dakota and Montana, EIA data shows. States that saw the biggest spike in residential electricity bills in that period included Maine, Connecticut and Utah.
U.S. electricity demand is expected to reach unprecedented levels in the coming years, surging 25% by 2030, according to data from the EIA and a recent ICF International report. After years of relatively flat demand, the sharp rise has prompted an “urgent need” for more electricity resources, according to the major grid watchdog North American Electric Reliability Corporation (NERC).
Growing expectation for the re-industrialization of America is also contributing to rising U.S. energy demand, and aging energy infrastructure that is not being replaced fast enough is straining the grid, according to some energy sector experts.
The Trump administration has drawn attention to America’s growing electricity needs and has moved to ramp up dispatchable energy sources like coal, nuclear and natural gas. In contrast, the Biden administration touted green energy sources like wind and solar as the future of American electricity, an approach the Trump administration and some energy experts have criticized as relying on intermittent and less effective power sources.
“You never know if these energy sources will actually be able to produce electricity when you need it — because you don’t know if the sun will be shining or the wind blowing,” Wright wrote in June.
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So, AI takes the blame for increased demand? Only a while ago it was digital currency “mines” that were going to use up all our electricity. WUWT?
One 2GW data center (facebook/Meta) is roughly 5% of California’s demand. 10 of them would equal 50% of California’s usage. 1 data center not much effect but 10 would be a dramatic increase.
Does it really matter who or why it’s going up … you have a demand and so there is a requirement to meet it. That is how economies work.
It’s laughable that anyone could be surprised by the massive energy consumption of AI and Bitcoin mining. It’s not a secret; anyone claiming otherwise is simply ignoring the facts.
It’s not an either/or.
And the only REAL way to meet that demand, is with Coal, Gas and Nuclear.
Or oil, but there’s better uses for that. Hydro too, where available.
hiskorr, that’s a good observation.
It’s like a shell & pea game, you constantly shuffle the blame to confuse the observer.
Remember, only a while ago, when all we had to do to ‘SAVE THE – planet/whale/snail/rainforest/polar bear/penguin/ …’ ( it changed every few months);
Was to stop – driving/flying/voting the wrong way (& every political party claimed to be the right way)/eating meat/having kids/using plastics/… ( it also changed every few months).
If only we could stop questioning ‘the consensus’, learn to obey the rantings of deranged politicians & school dropouts, pay more taxes, & stop criticising high mileage hypocritical elites, all would be well. sarc
The thing about the shell & pea game is that there is no pea under the shell. No need to confuse the observer when the player is holding the pea in his hand. The game is rigged from the start.
Not according to the article:
“driven in part by the growing demand from power-hungry artificial intelligence (AI) data centers”
Also identified was the reindustrialization energy demands.
It’s been estimated that by the year 2030 11% of all of the electricity generated in the USA will be used for artificial intelligence.
McKinsey & Company “AI’s power binge”
It could go as high as 17-19% by 2032
The IEA expects electricity demand for AI in the US to account for almost 50% of electricity demand growth by 2030 when data centres will be consuming more electricity than that used for the production of aluminium,steel,cement, chemicals and all other energy intensive industries combined.
IEA ‘Energy and AI’ (April 2025)
Trump is also trying for reindustrialization, which should also drive demand. Despite his critics using free trade fan fiction models on the effects of tariff policy, they seem to be working thus far.
Production cost (mostly government regulations, energy, taxes and wages) is too high in the US. Even with the tariff (payed by the client) the imported product will be cheaper than made in the US.
Well that’s because Tesla figure most owners want their fuel tank reasonably full in the morning as well as not coughing up for the extra tech and larger battery size than they require for transport-
Concerns EV makers restricting capability to feed back into homes, grid | Watch
That’s precisely what their Powerwalls are for stoopids and you don’t necessarily require solar panels to buy cheap and use dear via all your solar duck curve neighbours on the grid.
Part of the problem with “Buying Cheap” is that you often get exactly what you pay for.
With all the subsidies handed out by governments, you get exactly what others pay for.
True!
If only the US had more free “renewable” energy. They could be enjoying double digit price inflation like Australians rather than a lousy 6.5%.
Australian households are taking electricity into their own control (with a little help from the Chinese and government helping out with OPM). On average, there are 1000 households a day installing batteries.
How many years can such batteries last and what happens when one fails?
When I buy a regular auto it comes with a battery and about 5 years later I replace it – – at my expense.
Powerwall 3, costs around $15,300 before taxes and installation. In 5 years that will be about $17,750; in 10 years about $20,000.
And, where does the juice come from to recharge them daily?
Perhaps the Grid??
Still paying for the Juice PLUS paying for the Batteries
Typically from solar panels on the roof. Typically daily home usage is down when people are at work so the batteries get to charge. And then grid peak load/prices in the early evening can be avoided.
Will it be worthwhile over the longer term for the upfront cost? Well that depends on how grid prices go, and from this article, they seem to be projected to trend upward.
I did look into that myself.
New Roof (to support panel weight) $30,000 (and I just had it replaced for $16,000)
Powerwall Battery $11,000 for 14kWH (summer I use 49kWH so x 4 $44,000)
Sufficient solar panels to recharge said battery in 4 hours peak sun production (400W x 2.5 / 4 (per kWH) 14×2.5=36 panels ($175-$2000 per panel..buy cheap get cheap) $5k-$60k
Replacement period 15 years (after every hail storm)
Time to break even 80-100 years without inclement weather damage
“Sufficient solar panels to recharge said battery in 4 hours peak sun production”
You are assuming that you will get that sun every day and in the winter too. Far too optimistic.
Forever the optimist!🤗
I’ve never heard of anyone needing a new roof to support the weight of solar panels. They typically anchor to the trusses. You dont need to fully cover the total energy you use, just the expensive times to benefit.
You claim to have replaced your roof for $16k but claim adding solar energy is going to be around $134k
I call BS on your whole “I did look into that myself” story.
I’m in a modular home with roof trusses that aren’t sized to support panels (most mobile home and modular homes are this way) so my entire roof would need replacing. The $16k was a reshingle with some spongy plywood replacement and skylight replacement.
Ah yes those home battery subsidies are really kicking in for coal fired Commie batteries.
Home battery blitz: “Astonishing” numbers mark first month of game-changing rebate – One Step Off The Grid
Just so long as we’re not implementing tariffs like that awful orange man-
Nyrstar to get $135 million bailout for struggling smelters
Always remember free trade good tariffs baaaaad!
$135M. A band-aid solution to a guillotine problem.
$135M is a drop in the bucket compared to Wind and/or Solar subsidies.
In Western Australia installing gas for hot water heating is a lot cheaper than using electricity but not sure if it works in Eastern States which has a very high gas cost.
Solar is the best option for water heating especially in countries with a lot of sun and during summer everywhere. For cooking you now need less electricity or gas to bring it to boiling temperature. Washing the dishes, having a shower, warming the house, cooking is most of your energy bill. And water in a good isolated storage can stay hot for a very long time.
Solar should never power the grid.
Well, electricity *and* gas, most likely (appliances have electric thermostats and switching, water is pumped if you have a well, etc.). Or electricity and oil, if you don’t have gas, which is my case.
But solar isn’t much good in the high latitudes in particular where there are lots of trees.
Cut down the trees. Dangerous to live among a lot of trees.
And how long do these batteries last, 1 hour, 2, 10, 24?
I suspect it’s more likely minutes.
East Coast Australia is going to spend billions on batteries to try and hold the grid up for 30min and an ongoing expenditure for maintenance. Not really going to help on most days when 60% of the grid needs FF generation and lefties never seem to get the futility of the gesture.
Guess whos going to pay to have these 500 MW battery farms on instant standby for grid emergency ?
There’s always been reserve generation but it used to be able to run for days if necessary not 30 min. In fa!ct it was the same generation type as the baseload it was backing.
They would be better off with a propane fired generator and a big tank, if you can get propane in Oz that is.
I call BS on AI data centers driving the cost. Not enough of them have been built yet to materially effect the cost and those that are being built are bringing their own generation (and not generally connected to the grid).
Don’t have any hard data, but general inflation has driven up the cost of everything else by a minimum of 1/3, so why would that not also effect power? Add to that the cost of wind and solar and especially the cost of grid enhancements to support wind and solar and why would energy costs NOT be spiking?
Agree. We already have data centers with hundreds of processors, gaxilobits of storage, and they’re not destroying the grid.
True but the switch to fickles in Oz isn’t just about predicting AI or EV needs-
Solstice Energy to cut gas supply to 10 regional Victorian towns – ABC News
Sorry folks but there aint enough earn in it anymore so go see the climate changers in Gummint about your energy needs as they’re the experts.
The first thing I would do is find out who owns the gas pipes. Quiet often it is the government who then leases them out to the company. If that is the case then the towns could setup a co-operative and take over the distribution. It just becomes an economics exercise.
The difference is that the growth in old style datacentres was over decades and they were commonly small power demand, distributed over dozens of locations around major cities.
The growth now is unprecedented is such a short time frame. As for the actual processors themselves , the latest AI GPU are vastly more power demand ..each…than before. Home gamers 250W climbed to 600W very quickly became 1000W for the Nvidia B200 Blackwell as used inAI
True, but “AI” is combing through all of those “data centers” searching for information at the demand of those feeding it a question out of pure curiosity as to what it might spit out.
That gobbles up a lot more power than “storage” which is occasionally accessed.
Indeed, printing dollars like there is no tomorrow is the real reason prices go up. It is also the reason your savings are melting away like snow in summer in the Sahara. It is the hidden tax when government grows too big and doesn’t want to pay the bill.
Just think what your grandparents could buy with 1 dollar.
And of course tariffs also will make prices go up. But don’t think producing the same product in the US today would make prices go down. Production costs are just too high.
Tariffs are taxes, so assuming they aren’t ‘accommodated’ by our delightful central bank, theoretically aren’t inflationary. Specifically, if the money supply remains constant, if I have to pay more money for a new car, I’ll have less money to invest or to buy other stuff with, which should cause the prices of these items to decline.
However, like any tax that transfers resources from the productive private sector to the unproductive public sector, tariffs are unambiguously a drag on economic efficiency that lowers our standard of living.
Correcto!
‘Inflation is always and everywhere a monetary phenomenon…’ – Milton Friedman
Adding wind and solar absolutely is pushing power prices up, no thinking person could ever believe otherwise.
You have to back it up 100% for when it doesn’t work (read: more often than it does), which means building two systems to do the same job the original system (that works) can do by itself.
On occasion, politicians let some truth sneak through…
“Under my plan, electricity prices will necessarily skyrocket.” – Barack Hussein Obama
If he was completely honest, of course, he would have said “Under my plan, electricity prices will UNNECESSARILY skyrocket.”
Well I wouldn’t go so far as to say it’s BS, it’s just not the complete picture.
“AI” *DOES* consume massive amounts of power. And adding a lot of NEW demand in a short time period is bound to spike prices, particularly in the background of the disastrous policies of the last two-plus decades of discouraging construction of dispatchable generation like coal, gas, and, for far longer, nuclear, while pouring favor and money on worse-than-useless wind and solar – AND with inflation at record levels under the disastrous Biden puppet administration which was pushing such stupidity extra hard.
So while “the grid” is already reeling from the stupid government push to accommodate worse-than-useless wind and solar while celebrating the destruction of functional coal plants, introduce a lot of fresh demand over a short time frame to feed Automated Idiocy. Not a big leap to see that driving prices up.
The US simply needs to require “Power Hungry Data Centers” to provide for their own power needs. Whether:
Coal,
Gas,
Hydro,
Nuclear or
Renewable + Battery Storage
This eliminates both the upward pressure on the grid and the potential Peak Demand Price Increases placed by THEIR demand.
For that matter probably any Commercial/Industrial Business with similar power demands should face the same requirements for the same reasons.
If a 2GW Data Center installs 6 – 400MW Small Modular Reactors to provide their power needs off grid then they have “ZERO” effect on Peak Demand and “ZERO” effect on Peak Demand Pricing. And they owe no-one for their power usage potentially lowering the price of their services.
They could even potentially sell back their overproduction to the grid at a potential profit.
And before you ask…
https://wattsupwiththat.com/2024/12/08/facebook-commissions-a-2gw-fossil-fuel-powered-data-center/
Agreed. Utilities have been under fire over renewable mandates and so on. So I have a certain amount of empathy, but large facilities whether manufacturing or AI/bitcoin should be kept away from the residential ratebase. If they want a utility to provide power ratepayers should not have to contribute to capital costs which will be enormous.
Microsoft is working on it!
https://www.npr.org/2024/09/20/nx-s1-5120581/three-mile-island-nuclear-power-plant-microsoft-ai
There is generally a correlation between economy growth and electricity use. Nothing special about AI, its just economic growth which always results in new applications which require energy. Grok generated a chart and image but seems not to post for some reason. But just ask it or Perplexity., they’ll refer you to the World Bank and then generate a chart of the correlation.
Lets try this one (it’s a png file soo…)
There may be no low-energy rich countries, but there sure are gonna be lots of high-energy poor countries pretty soon!
It should be cheap and abundant energy to make it a rich country. Energy (and taxes) should not be the main production cost item.
No, it’s the supply, stupid. The war on coal, and nuclear diminishing, replaced with expensive, unreliable Ruinables. Recipe for disaster, and yes, skyrocketing costs. Sure, increased demand may also play a part. We have a grid in the northeast strained to the max, burning everything but the kitchen sink, including oil, wood and trash, and yes, even coal – gasp, and that shows how desperate they are. It’s an inefficient, and expensive way to run a grid. We’ve been lucky so far, to not have a massive blackout, and the same is true in winter.. Natural gas supplies are strained due to it being used to heat homes as well as for electricity. That’s no way to operate a grid.
Exactly why we should keep using coal. It is best for baseload power anyway. It can be stockpiled so supply disruptions don’t instantly lead to cutoff of generation.
And it isn’t going to be subject to price spikes because heating demand surges in cold winter conditions.
The AI firms must pay for their power needs. After all, they are run/owned by billionaires and probably soon trillionaires. They can afford it.
I have this sneaking suspicion that the real reason AI firms are signing power purchase agreements with nuclear power plants is to gain control of their output with the intention of selling their access privileges to the highest bidder at some future time, doing so at a considerable profit.