Consumers and government officials are increasingly worried America’s data center boom is a major reason for skyrocketing energy costs on households already struggling to pay their power bills.
It doesn’t help that the sudden surge in predicted energy demand[1] data centers are causing comes at an uncertain time for the power system. The growing cost risk facing consumers is being worsened by federal policy[2] that chooses to force old, expensive coal plants to stay online past their planned retirements while blocking investments utilities were choosing to make in cheaper, cleaner resources.
How much consumers end up paying for the surge in data centers[3] will depend largely on how the United States chooses to meet this moment of rising demand for electricity.
Doubling down on fossil fuels will guarantee consumers continue paying rising energy bills for years to come. Adding new domestic clean energy resources to meet growing energy needs,[4] on the other hand, can save households billions of dollars by the end of the decade alone.
Clean energy is the lowest way to meet surging demand
The fossil fuel industry says dirty, outdated technologies are the only way to meet data center demand and keep the grid safe. But the reality is that we have abundant clean energy solutions just waiting to be used—and all are cheaper for consumers.
Accelerating clean energy deployment could save consumers at least $5.1 billion annually by the end of the decade, compared to a scenario where policymakers continue to keep us dependent, shackle us?? on coal and gas, according to new modeling analysis from Energy Innovation.[5]
By contrast, meeting that demand with mostly fossil fuels will cost consumers $29.7 billion by 2030—and could cost even more under a scenario where coal and gas prices continue to spike. In total, expanding clean energy development to meet rising demand reduces costs by at least 17 percent, relative to meeting that demand with fossil fuels.
The bottom line is clean energy remains cheaper and less risky than fossil fuels and they can come online fast enough to meet the need. Expanding clean electricity ensures economic growth and reliable power for the future, while avoiding the risk of volatile fossil fuel prices, which spike whenever extreme weather hits or international conflicts break out. It also guarantees a lower-risk investment if projected data center demand growth does not materialize––both by avoiding the additional costs of fossil fuels and by increasing the efficiency of how data centers are operated.
Protecting customers from volatile fossil fuel prices
Geopolitical turmoil and extreme weather events often send coal and gas prices climbing, which raises the overall electricity costs consumers pay. That’s because coal and gas are traded commodities whose price fluctuates dramatically[6] based on even small shifts in supply and demand.
Under a model where fuel prices spike to levels consistent with historic trends,[7] the U.S. risks saddling consumers with even higher costs. Volatile fuel prices could send prices surging to $40.5 billion per year under this modeling scenario, while clean energy investments reduce those costs by 21 percent, saving consumers $13.5 billion annually.
Several examples of these price spikes exist in recent history. The 2022 Russian invasion of Ukraine drove European gas prices to record highs, which in turn drove up U.S. gas prices as domestic producers rushed to capitalize on high overseas prices—tightening supply at home. The increase in gas prices also sent coal fuel costs surging as the market adjusted to compete with higher rates.
Just four years later, the Strait of Hormuz closure[8] due to the war in Iran has sent oil prices surging, and once again worsened fuel prices across the board.
Extreme weather—particularly extreme cold snaps—drive up fuel prices as well. In the U.S., several recent winter storms have shown how cold weather can both drive-up demand for fuel as consumers rush to heat their homes, while tightening supply as some wells and pipelines shut down during freezing conditions.
Winter Storm Uri[9] struck the South-Central U.S. in 2021, causing gas prices to surge to as much as 100 times above typical levels in the region. In some cases, those effects will be felt for decades to come. Oklahoma customers, for instance, will pay $4.5 billion over the next 25 years[10] from that storm alone.
Meanwhile, clean energy resources like wind, solar, energy efficiency, demand response, and storage avoid fuel costs altogether,[11] bypassing the global volatility that comes with coal and gas plants.[12]
Keeping risk low if demand does not materialize
No single, reliable estimate exists for exactly how fast and how much electricity demand will grow. Plans to build data centers across the country have already been delayed or scrapped entirely because of stalled supply chains, issues connecting to the power grid, and local resistance.
This leaves policymakers with a major conundrum: If we need new generation to meet rising demand, we must make those decisions now given the long lead time to build new power infrastructure and the risks of costs rising if demand far outpaces supply. But overbuilding fossil fuel power generation could leave consumers on the hook for expensive grid infrastructure that ultimately wasn’t needed.
A system that prioritizes clean energy resources reduces overall system demand and avoids high fuel costs – it’s the lowest-risk approach to meeting uncertain demand projections. Investing in resources like energy efficiency and demand response complement clean energy, lowering stress on the grid system while avoiding the capital-intensive costs associated with building massive new power plants. Adding cheaper wind and solar resources to the grid, meanwhile, guarantees new generation resources provide power at the lowest possible price.
In fact, under a scenario where just 33 percent of demand is realized, a system that prioritizes clean energy saves $2.6 billion over one that favors fossil fuels.
Reliably, cost-effectively meeting demand growth even under grid stress
Power systems that includes a diverse portfolio of resources—new sources of solar, wind, and energy storage, alongside existing coal, gas, nuclear, and hydropower—is the best suited to meet high demand, even during the most challenging grid conditions.
But America is not meeting the moment. The country’s largest electricity market, PJM Interconnection,[13] failed to secure enough generation to meet its reliability targets in its latest auction, despite record high prices intended to bring more generation online. Meanwhile, the process to connect new resources to the grid system remains congested across the country, with resources sitting in limbo for an average of five years before they can start providing power.
Meanwhile, extreme weather hits harder each year. Severe winter weather[14] and rising heat are sending the grid to new records of system stress. But Energy Innovation modeling[15] found that a diverse portfolio of resources that expands clean energy capacity and retires uneconomic fossil fuel plants is well suited to reliably provide power at the best price possible.
How policymakers can encourage competition and cut red tape
Elected officials have many tools in their toolbelt to ensure our country can meet rising demand from data centers as cheaply as possible, and insulate their constituents from rising energy bills as much as possible.
Policymakers should stay committed to ambitious clean energy targets and cut red tape to building and connecting new resources to the grid, bringing them online as efficiently as possible. They can also help improve system planning to ensure states and grid operators are working with the most up-to-date cost and demand data possible. Better data can maximize resource competition to ensure the cheapest resources are built first, then help coordinating with other regions as needed.
Policymakers should also squeeze more generation out of existing grid infrastructure through energy efficiency, demand response, and advanced transmission technologies. We can help cut rising demand even more through transparent system planning that identifies efficient demand reduction and encourages virtual power plants. Finally, we can manage fuel price risks, including cost sharing mechanisms that can incentivize utilities to better manage that risk.
Overall, government officials have many levers to pull that can ensure the U.S. meets rising data center demand without harming consumers – and an obligation to best serve their constituents.
[1] U.S. Energy Information Administration, “New U.S. Electric Generating Capacity Expected to Reach a Record High in 2026,” U.S. Energy Information Administration, 2026, https://www.eia.gov/todayinenergy/detail.php?id=67205.
[2] Robbie Orvis and Dan O’Brien, “Economic, Consumer Cost, and Pollution Impacts of Federal Energy Policy Changes,” Energy Innovation, 2026, https://energyinnovation.org/report/economic-consumer-cost-and-pollution-impacts-of-federal-energy-policy-changes/.
[3] Arman Shehabi et al., “United States Data Center Energy Usage Report,” Lawrence Berkeley National Laboratory, 2024, https://escholarship.org/uc/item/32d6m0d1.
[4] Tyler Norris et al., “Rethinking Load Growth: Assessing the Potential for Integration of Large Flexible Loads in US Power Systems,” Duke University Nicholas Institute for Energy, Environment, & Sustainability, 2025, https://nicholasinstitute.duke.edu/publications/rethinking-load-growth.
[5] Brendan Pierpont, Matthias Fripp and Michelle Solomon, “Let The Sun In: Clean Energy Is The Cheapest Way To Meet Rising Demand,” Energy Innovation, 2026, https://energyinnovation.org/report/let-the-sun-in-clean-energy-is-the-cheapest-way-to-meet-rising-demand/.
[6] U.S. Energy Information Administration, “Natural Gas,” U.S. Energy Information Administration, 2026, https://www.eia.gov/dnav/ng/hist/rngwhhdD.htm.
[7] Brendan Pierpont, “Why Are Natural Gas Prices So High?”, Substack, 2026, https://thepowerline.substack.com/p/why-are-natural-gas-prices-so-high/.
[8] Sonali Deshpande, “Iran War Energy Price Spikes Threaten America’s Industry,” Substack, 2026, https://thepowerline.substack.com/p/iran-war-energy-price-spikes-threaten/.
[9] Mike W. Ray, “2021 Winter Storm Uri Bonds Total Approximately $4.5B,” Southwest Ledger, 2024, https://www.southwestledger.news/news/2021-winter-storm-uri-bonds-total-approximately-45b-0.
[10] Mike W. Ray, “2021 Winter Storm Uri Bonds Total Approximately $4.5B,” Southwest Ledger, 2024, https://www.southwestledger.news/news/2021-winter-storm-uri-bonds-total-approximately-45b-0.
[11] Brendan Pierpont, “Clean Energy Isn’t Driving Power Price Spikes,” Energy Innovation, 2024, https://energyinnovation.org/report/clean-energy-isnt-driving-power-price-spikes/.
[12] Michelle Solomon, “Coal Power 28 Percent More Expensive In 2024 Than In 2021,” Energy Innovation, 2025, https://energyinnovation.org/report/coal-power-28-percent-more-expensive-in-2024than-in-2021/.
[13] Jason McGovern, “PJM Auction Procures 134,479 MW of Generation Resources,” 2025, https://insidelines.pjm.com/pjm-auction-procures-134479-mw-of-generationresources/.
[14] Silvio Marcacci, “Fossil Fuels Failed During Winter Storm Fern,” Substack, https://thepowerline.substack.com/p/fossil-fuels-failed-during-winter/.
[15] Brendan Pierpont, Matthias Fripp and Michelle Solomon, “Let The Sun In: Clean Energy Is The Cheapest Way To Meet Rising Demand,” Energy Innovation, 2026, https://energyinnovation.org/report/let-the-sun-in-clean-energy-is-the-cheapest-way-to-meet-rising-demand/.