US power demand rises as data centers spread but prices won’t peak until 2030

US retail power prices have surged 13% since 2022, outpacing the Consumer Price Index (CPI) and driving higher costs for consumers. While many have pointed to rising demand from data centers as the culprit for the increase, Rystad Energy’s analysis shows that data centers have yet to significantly influence power prices in the current terms. Our research points to the full price impact of data centers emerging closer to 2030, driven by the completion of a wave of data center infrastructure and more centers coming online. Rystad predicts that meeting this inevitable increase in energy demand will be difficult to meet due to severe supply-side bottlenecks, including generator retirements, lengthy interconnection timelines and project viability risks.

Retail power prices reflect the mounting financial costs of capacity charges, transmission and distribution (T&D) fees, and system maintenance costs, all of which have been trending upward as grids adapt to rising data center demand and renewables integration. If the energy transition and growth of data centers are expected to be globalized, these growing pains will only increase in complexity as they are applied to less resilient power grids and markets,” said Marina Domingues, vice president and head of US new energies.

While nominal wholesale power prices have remained relatively stable since 2023, retail rates have surged. Retail consumers are facing astronomical increases in electricity costs, paying 300% premiums for power compared to wholesale premiums at around 120%, depending on the region. The most affected markets are those requiring extensive T&D infrastructure upgrades to accommodate integration of variable renewable sources, such as the New England Independent System Operator (NE-ISO), California ISO (CAISO) and New York ISO (NYISO). These market regions face compounding pressure from rising electrification rates and operational challenges introduced by intermittent generation.

While traditional sectors still dominate US consumption, data centers are rapidly emerging as a core driver of structural load growth, fundamentally altering the load profile with sharper peaks and increased demands on grid flexibility. Residential and industrial loads will remain the bulk consumers, but data center demand is projected to expand dramatically, rising from negligible levels in the early 2020s to 12% of total demand by 2030 and reaching 21% by 2050.

The widening gap between rising retail power prices and flat wholesale power prices signals a growing divergence of energy and reliability pricing across the US. While this shift is still in its infancy, upward cost pressures related to maintaining resource adequacy and system capacity will become more prevalent in consumer bills, especially where data centers are being constructed near residential areas.

Contacts

Marina Domingues
Vice President and Head of US New Energies
Phone: +1 713 980 3800
marina.domingues@rystadenergy.com

Katie Keenan
Media Relations Manager 
Phone: +1 713-301-9300
katie.keenan@rystadenergy.com

About Rystad Energy

Rystad Energy is a leading global independent research and energy intelligence company dedicated to helping clients navigate the future of energy. By providing high-quality data and thought leadership, our international team empowers businesses, governments and organizations to make well-informed decisions.

Our extensive portfolio of products and solutions covers all aspects of global energy fundamentals, spanning every corner of the oil and gas industry, renewables, clean technologies, supply chain and power markets. Headquartered in Oslo, Norway, with an expansive global network, our data, analysis, advisory and education services provide clients a competitive edge in the market. 

For more information, visit www.rystadenergy.com.