Report: Data centers could cause wholesale electricity price spikes in Delaware

A new analysis by Siemens Energy, commissioned by the State of Delaware, suggests that the construction of new data centers could significantly increase wholesale electricity prices, potentially raising the average wholesale price by over 80% if energy demand doubles by 2029. This finding is particularly relevant as Delmarva Power anticipates winter peak electricity demand in its Delaware coverage area would likely double if five data centers planned for New Castle County are built. Delaware Public Advocate Jameson Tweedie expressed concern, suggesting that requiring data centers to generate their own power could mitigate these effects, although Delmarva Power believes data center growth could help offset existing transmission costs. The analysis also highlighted that locational marginal prices could be especially high in southern Delaware due to transmission line congestion, despite no data centers being proposed there. In response to these concerns and rising energy prices across the region, Delaware's environmental agency commissioned the analysis as part of an ongoing debate over a proposed large-load "tariff." This tariff aims to establish a new electricity rate class for data centers, imposing higher fees and requiring deposits for electrical infrastructure improvements, though Tweedie argues it may not fully shield ratepayers from wholesale cost spikes. Adding to the regulatory landscape, the Delaware Department of Natural Resources and Environmental Control (DNREC) recently ruled that the Coastal Zone Act prohibits data center facilities near the Delaware shoreline, a decision that is expected to be appealed. While the state legislature is exploring options like a Nuclear Energy Task Force for increased power generation, the Siemens analysis underscores that limiting new data center construction would lessen the impact on energy demand and prices. Starwood Digital Ventures, behind the state's largest data center proposal, did not comment on the report.