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Rising data center demand could significantly increase electricity prices in key U.S. regions, according to a new analysis from the U.S. Energy Information Administration (EIA).

The report finds that rapid growth in electricity consumption, driven largely by expanding data center infrastructure, is expected to outpace other sectors, particularly in ERCOT (Electric Reliability Council of Texas) and the PJM Interconnection.

Under baseline projections, electricity load in ERCOT is expected to grow by 10% annually between 2025 and 2027, while PJM is forecast to see 3.2% annual growth. However, in a high-demand scenario, load growth could reach 15% in Texas and 4.7% in PJM.

The EIA warns that if demand exceeds expectations, the impact on prices could be significant. In Texas, wholesale electricity prices at the ERCOT North hub could rise by as much as 78.9% above current forecasts by 2027. In contrast, price increases in PJM are expected to be more limited, at around 4%, due to stronger grid interconnections and access to additional coal and natural gas generation.

Nationally, electricity demand growth has accelerated in recent years, increasing from 0.1% annually (2005–2019) to approximately 1.7% between 2020 and 2025. The EIA projects demand to rise further by 1.9% in 2026 and 2.5% in 2027.

While most regions are expected to manage increased demand without major disruptions, the findings highlight challenges for grid operators in balancing rapid load growth, generation capacity, and price stability—particularly as AI-driven data centers continue to expand.

Source: utilitydive.com