I’m not sure who sent up the bat signal declaring AI data centers the newest symbol of evil and oppression, but the message certainly went out ‒ quickly and broadly. And, according to new research, incorrectly.
A recent study by researchers at the Electric Power Research Institute found that states with greater growth in data center capacity not only experienced lower local utility prices, but that the data centers themselves were responsible for a meaningful share of those price declines.
Nationwide, data center capacity grew 160% from 2019 to 2024, leaving electricity rates roughly 6% lower than they would have been otherwise.
Virginia leads the U.S. in data centers, with these facilities accounting for more than 20% of the state’s energy consumption.
(For comparison, data centers made up about 10% of TVA’s total power load in 2025.) Yet from 2019 to 2024, electricity rate changes in Virginia were essentially the same as the national average.
The largest electricity price increases, meanwhile, occurred in Maine and California ‒ states where data centers account for less than 3% of electricity usage and new construction has lagged far behind the rest of the country.
How can increased electricity demand result in lower prices?
Electric utilities operate with massive fixed costs that don’t vary much with output. As long as a system has spare capacity, spreading those fixed costs across a larger base of customers and kilowatt-hours actually reduces the per-unit price.
New technologies often look inefficient ‒ and even threatening ‒ in their early stages, before their long-term benefits become clear.
In 1946, the University of Pennsylvania housed the Electronic Numerical Integrator and Computer (ENIAC), widely considered the world’s first electronic computer. The machine contained 18,000 vacuum tubes, plus thousands of resistors, capacitors and relays. It weighed about 30 tons and generated so much heat that the 1,800-square-foot building housing it needed its own dedicated air conditioning system.
It was, essentially, the world’s first data center.
The ENIAC consumed about 150 kilowatts of power and could perform around 5,000 operations per second. My office desktop computer uses just 150 watts ‒ one-thousandth of the ENIAC’s power draw ‒ yet can perform trillions of operations per second.
I’m certainly glad that Philadelphia, the birthplace of American liberty, didn’t outlaw computers.
Curiously, the ENIAC had its own dedicated electrical infrastructure, separate from Philadelphia’s standard residential grid. That “bring your own power” approach looks increasingly like the future for new data centers. Developers are building their own generation capacity behind the meter. Not only does this sidestep concerns about raising local residential rates, it’s often faster for the developers themselves.
David Moon, president of Moon Capital Management, may be reached at david@mooncap.com.
This article originally appeared on Knoxville News Sentinel: Data centers may reduce utility cost | Opinion
