Rystad Energy forecasts that the full price impact from data center expansion will materialize toward the end of this decade.New Delhi: Retail electricity prices in the United States have increased 13 per cent since 2022, exceeding the pace of Consumer Price Index (CPI) inflation, driven by higher transmission and distribution costs, capacity charges and system maintenance expenses, according to a new analysis by Rystad Energy. The report states that while data centers are expected to become a major factor in driving electricity demand, their impact on power prices is yet to be fully realised and will be felt closer to 2030.“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 at Rystad Energy.
Despite wholesale electricity prices remaining comparatively stable since 2023, retail consumers are paying sharply higher rates. In some markets, consumers are paying up to 300 per cent more than wholesale prices, compared to wholesale premiums of 120 per cent. Regional power networks such as the New England Independent System Operator (NE-ISO), California ISO (CAISO), and New York ISO (NYISO) have been the most impacted due to rising infrastructure costs and grid adjustments to accommodate renewable energy sources.
Rystad Energy’s analysis highlights that while data centers currently account for a small share of total electricity consumption, their role in structural load growth is increasing. Data center electricity demand is projected to rise to 12 per cent of total US power demand by 2030 and is expected to reach 21 per cent by 2050, introducing new pressures on peak load and grid flexibility.
“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,” Domingues added.
The analysis notes that the upcoming increase in electricity demand from data centers may be difficult to manage due to supply constraints, including retiring thermal generation assets, long connection queues for new projects and economic uncertainties affecting power sector investments.
Rystad Energy forecasts that the full price impact from data center expansion will materialize toward the end of this decade, as new facilities come online and grid infrastructure upgrades accelerate to meet increased consumption.
- Published On Oct 29, 2025 at 07:22 AM IST
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