Five Things Causing Electricity Prices to Spike

Newsweek

5 days ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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Artificial intelligence (AI) and cryptocurrency are among the technological advances driving up energy demand across the United States, which could result in higher energy prices for consumers.
Why It Matters
These innovative technologies are rapidly reshaping all aspects of global society, but have fueled concerns about energy usage. As technology like AI becomes more accessible and widely used, many critics are concerned about both its environmental impact and the potential to drive up energy demand and prices for Americans.
Energy consumption in the U.S. is on the rise, according to a June U.S. Energy Information Administration report. Consumption is expected to hit 4,193 billion kilowatt-hours in 2025, up from 4,097 billion kilowatt-hours in 2024, according to the report.
What To Know
An aerial view of a large Google Data Center being built in Cheshunt, England, on May 31, 2025.
An aerial view of a large Google Data Center being built in Cheshunt, England, on May 31, 2025.
Richard Newstead/iStock via Getty Images
Artificial Intelligence
Millions of Americans now utilize AI in their day-to-day lives, whether for work, to quickly search for information online, or generative purposes. However, studies show that the widespread use of AI may come at a cost.
A May 2024 study by the Electric Power Research Institute (EPRI) found that AI data centers could account for 9 percent of U.S. electricity generation by 2030. This is largely because AI searches use approximately 10 times the energy of traditional searches through engines like Google. AI-generated photographs and multimedia use even more energy.
These data centers consume a significant amount of power to process and store massive amounts of information, as well as to cool equipment to prevent it from overheating.
PJM Interconnection, a transmission organization covering parts of the East Coast and Midwest, on Tuesday announced that electricity demand is likely to continue to "rapidly" grow, driven largely by data center expansion, electrification and economic growth.
A Monitoring Analysis report from June pointed to the growing number of data centers as the "primary reason for recent and expected capacity market conditions."
"It is misleading to assert that the capacity market results are simply just a reflection of supply and demand. The current conditions are not the result of organic load growth. The current conditions in the capacity market are almost entirely the result of large load additions from data centers, both actual historical and forecast," the report reads.
Cryptocurrency
Cryptocurrency is also driving up energy demand. According to Energy Star, the global annual energy consumption across the market is 68 terawatt hours.
Cryptocurrencies like Bitcoin require computers to solve complex mathematical problems to verify transactions, which consumes a high amount of energy, contributing to increased energy consumption. A 2021 University of Chicago study found that cryptomining could cost Americans up to $1 billion each year.
"In Upstate New York, where a quarter of US crypto mining takes place, the researchers find that electricity rates have gone up in response to rising demand. Their study demonstrates that because of bitcoin mining's power usage, households paid an additional $165 million a year in energy costs, while businesses paid an extra $79 million," the report reads.
AI and crypto are not the only reasons consumers are paying more for electricity; however, new technologies and societal developments could also be contributing to higher energy bills.
Work From Home
Many Americans may see their energy prices increase because they are working from home, which requires more energy for lighting and computers. A Power Wizard study released earlier in July found that remote work increases electricity prices by about 6.8 percent, or $109 more per year.
That does depend on location, though. California saw the highest percent increase at 11 percent, while Louisiana ranked the lowest at only a 4.38 percent increase in energy bills for those working from home.
Global Politics
Electricity prices are also tied to the state of global affairs, as the cost of fossil fuels can fluctuate during times of conflict. The Russia-Ukraine war, which began in 2022, has seen many countries restrict the imports of Russian oil as a form of sanction against Moscow. The conflict also exacerbated inflation, an economic challenge already faced by much of the globe.
A World Economic Forum study published in February 2023 found that the conflict nearly doubled energy costs worldwide. Conflict in the Middle East, where many countries produce oil, has also at times caused electricity prices to fluctuate. There have been concerns that simmering tensions between the U.S. and Iran could drive energy prices upward throughout the summer.
One Big Beautiful Bill Act
The Republican-backed One Big Beautiful Bill Act, signed into law by President Donald Trump, could also cause electricity prices to increase, according to some studies.
The bill amends clean energy grant programs enacted by the former President Joe Biden administration, which critics say could lead to increased electricity prices due to higher demand for fossil fuels, even as demand is already rising due to the expansion of data centers.
Energy Innovation found that by 2030, Nevada residents could see their prices increase by $300, the most of any state.
What People Are Saying
White House assistant press secretary Taylor Rogers previously told Newsweek: "Since Day One, President Trump has taken decisive steps to unleash American energy and drive oil and gas production to reduce the cost of energy. The One Big Beautiful Bill will turbocharge oil production by streamlining operations for maximum efficiency and expanding domestic production capacity, which will deliver further relief to American families and businesses."
The International Energy Agency (IEA) said in an April report: "In the United States, power consumption by data centres is on course to account for almost half the growth in electricity demand between now and 2030. Driven by AI use, the US economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminium, steel, cement and chemicals.
"In advanced economies more broadly, data centres are projected to drive more than 20% of the growth in electricity demand between now and 2030, putting the power sector in those economies back on a growth footing after years of stagnating or declining demand in many of them."
What Happens Next
The increase in electricity costs from AI centers remains a key issue that millions of Americans may face over the coming years, and one that lawmakers are already seeking to address. A bill introduced in New Jersey, for instance, would require AI data centers to be derived from renewable energy sources to avoid adding strain to the power grid.