Data centers contribute to high prices as energy bills electrify local politics

https://www.wsj.com/economy/consumers/surging-power-costs-are-putting-the-squeeze-on-customers-f8b2c04b

by moose_man • 9 months ago

105 67 9 months ago

l1n• 9 months ago

hm, I think this contradicts the results from https://www.sciencedirect.com/science/article/pii/S104061902...

cpitman• 9 months ago

Yeah, I was thinking of the same study. Looking at just the conversation on HN, lots of people are installing solar. Solar reduces the amount of energy used by that customer, but does not lower the cost of infrastructure to distribute power to that customer at all. And the cost of electricity is dominated by distribution and transmission, not generation. With an increased share of costs going to overhead infrastructure, the cost per watt goes up. Higher consumption increases the share of costs due to generation, and cost per watt goes down.

"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."

thechao• 9 months ago

Which is why cheap batteries will be the camel that broke the straw's back. It's really hard to find numbers, but I like 20–30$/kwh by 2030. At those prices I can get a 4 day backup for an oversized (50kw) solar panel install for my house for 20k$. Why even hook up to the grid, at all?

chrisBob• 9 months ago

My solar install is scheduled for December. Even if it ends up missing the cutoff for a tax break I still think it’s the right thing to do. The combination of investing in green energy and locking in my effective electric rate is the smart move right now.

… and I heard on Friday that OpenAI is planning a data center 15 miles south of me. That can only make things worse.

nonethewiser• 9 months ago

Whats the time to make your money back with and without the tax break?

dmoy• 9 months ago

I think GP's point isn't necessary "with vs without tax break", it's "with vs without giant future increase in electricity price"

SteveGerencser• 9 months ago

We cancelled our install after TN removed the state level breaks. It pushed the payback out past the expected lifespan of the panels (25 years). I would have been fine with a 10 year payback, but 25+ was just not worth doing.

edm0nd• 9 months ago

you'll basically never make it back iirc

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.

casey2• 9 months ago

You'd probably be cutting it close with the life of the panel (though maybe electricity price increase will save you) For CO2 I think it pays itself off fairly quick. It's probably the best investment you could make from a CO2 and local air quality perspective, maybe if your insulation is very bad or switching to a bike from a large personal car

0xbadcafebee4• 9 months ago

I also am in the process of completing a solar install to get the tax breaks expiring this year. Depending on total cost (i'm DIYing and didn't predict all expenses) I can pay it off in 5-7 years. My power bill is up 50% in one year, and has been increasing for years. With more datacenters taking up more power (which we pay for), the bill's only gonna increase.

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.

thelastgallon• 9 months ago

I thought there are almost no incentives for DIY. Any incentives usually come packaged with go through licensed contractors, who usually charge 10X more than DIY. This is what I've observed with most federal, state, city, utility incentives.

seany• 9 months ago

The fed tax credit ones are just part of your normal filing with the IRS (5695). The state ones vary

0xbadcafebee4• 9 months ago

Ask ChatGPT to find the specific statues for federal and state, and check your local code. Most areas allow a homeowner to do electrical and building construction themselves, as long as they pull permits and get inspections. The homeowner basically acts as their own contractor. Solar is no exception; it's just building + electrical work, after all.

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.

jasonsb4• 9 months ago

This is not true. Energy prices are rising globally, even in countries with few or no data centers and declining industrial activity. 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.

bdangubic• 9 months ago

widespread adoption of solar is America is planned for 2097 or thereabouts so few years left of extraction of revenue :)

jasonsb4• 9 months ago

It looks like the current administration hates solar, but maybe things will change in a few years. California and Texas are among the world leaders, so there's still hope.

add-sub-mul-div• 9 months ago

Well then what's your mechanism for denial of the data center premise?

antisthenes• 9 months ago

I wouldn't be so pessimistic. This oil-interest friendly administration won't last forever.

loeg2• 9 months ago

It is true, even if prices are rising in other places for other reasons.

jasonsb4• 9 months ago

Those other reasons being none other than pure greed.

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.

toomuchtodo5• 9 months ago

It is true.

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

jasonsb4• 9 months ago

Household electricity prices in 1st half of 2025: -0.5% - https://ec.europa.eu/eurostat/en/web/products-eurostat-news/... - October 29th, 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.

phil213• 9 months ago

Do any of these links actually show the exact method that datacenters are "socializing the costs" for energy production? They tend to pay industrial rates like any other industrial consumer would, and pay for their local interconnect to the grid. Why they should be on the hook for long distance transmission/etc. is unclear to me given that every user on the grid takes part of that and has enjoyed under-replacement electrical rates for decades. I have seen the typical local tax abatement deals which I totally agree need to be outright banned - but that's really the only thing that's jumped out at me. Otherwise it's largely opinion pieces parroting the same few background sources.

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.

gruez• 9 months ago

https://www.economist.com/content-assets/images/20251101_USC...

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-...

idiotsecant• 9 months ago

This is inaccurate. In places with cheap fuel and steady load the prices for power are rising no faster than inflation. In places where fuel costs are increasing or tech companies are forcing us to subsidize their moon race to nothing the prices are increasing.

helsinkiandrew• 9 months ago

Energy prices have risen roughly at the rate of CPI since 2022, perhaps we got used to the relatively flat prices for the previous decade:

https://www.apolloacademy.com/electricity-prices-have-grown-...

ssl-3• 9 months ago

Indeed. You're quite right.

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.))

bigbadfeline2• 9 months ago

Energy prices have risen roughly at the rate of CPI since 2022, perhaps we got used to the relatively flat prices for the previous decade:

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.

Ericson23142• 9 months ago

It is good the electricity demand is going up, because this will help us electrify things.

twoodfin• 9 months ago

I am not an expert in electricity generation or transmission, but it does seem strange that this “data center scare” is happening coincidental with (other?) big jumps in home electricity rates that have nothing to do with data centers.

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.

potato37328424• 9 months ago

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.

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.

nine_zeros• 9 months ago

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.

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.

trashface• 9 months ago

There is a big push in PA too. Our governor Josh Shapiro seems more pro-datacenter than not. (Note he is a potential 2028 presidential hopeful who, full disclosure, I voted for and don't regret doing that since the alternative was a total nut job IMHO).

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.

Data centers contribute to high prices as energy bills electrify local politics

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