Data centers lowered electricity inflation: landmark new study finds
A new study by the Electric Power Research Institute (EPRI) suggests that data centers modestly reduced US electricity prices between 2015 and 2024. The research indicates that for every 10% increase in data center capacity, residential retail prices fell by approximately 0.4% on average. This finding aims to debunk the myth that data centers are a primary cause of electricity inflation.
The Electric Power Research Institute (EPRI) published a landmark study on June 18, 2026, titled "Have Data Centers Raised Your Electric Bill? Causal Evidence from the United States," concluding that data centers modestly reduced US electricity prices between 2015 and 2024. The study challenges the common perception that data centers contribute to electricity inflation, asserting that for every 10% increase in data center capacity, average residential retail prices fell by approximately 0.4%. This finding suggests that a typical residential customer in a state with 160% data center capacity growth from 2019 to 2024 experienced a 6% reduction in their electricity rates.
The research, which utilized instrumental variables to establish causality, posits that the unique economics of natural monopolies in the power sector can lead to lower average costs with increased demand. If the incremental cost of meeting new demand is less than the existing average costs, the fixed costs of generation, transmission, and distribution are spread across more kilowatt-hours, thereby decreasing average costs.
While the study acknowledges that residential customers often face higher rates than industrial and commercial customers, its findings indicate that data centers, as commercial or industrial users, did not increase residential rates on average. Using Minnesota as a case study, the article highlights that from 2019 to 2024, residential electricity rates inflated by 3.1%, while data center capacity grew by 13%. However, Minnesota's data center capacity significantly increased by 616% to 308 MW by 2026.
The article, published by American Experiment, emphasizes the EPRI study's significance in "debunking the myth" about data centers' role in electricity price hikes. It also suggests that data centers expose true causes of price increases, such as renewables, and promote solutions like nuclear energy.