Data Centers Are Driving Up Power Bills. A New Study Looks at How Bad It Could Get
For Immediate Release
New research suggests electricity demand from data centers and cryptocurrency mining is likely to increase power costs in some parts of the country by up to 57% by 2030, with a national average increase of 6%-29%. Electricity demand related to data centers is also likely to increase CO2 emissions by up to 28% by 2030, relative to a future with no data center growth, according to the analysis from North Carolina State University, Carnegie Mellon University, the University of Pittsburgh and the University of Toronto.
“Power demand in the U.S. was relatively flat for almost 20 years,” says Jeremiah Johnson, corresponding author of a journal article on the work and an associate professor of civil, construction and environmental engineering at North Carolina State University. “But in the past couple of years we’ve seen a significant increase in power demand, due largely to data centers and – to a lesser extent – cryptocurrency mining.
“We wanted to understand the implications of this increased demand,” Johnson says. “What new power infrastructure will need to be built? Where? How will these systems be operated? What will that mean for the cost of electricity? And what will it mean for carbon emissions?”
The researchers drew on recent research to estimate data center and cryptocurrency power demand through 2030, and then made use of computational modeling tools to forecast what technologies would be used to generate that power.
“Specifically, we used an energy system optimization model,” says Anderson de Queiroz, co-author of the paper and an associate professor of civil, construction and environmental engineering at NC State. “An energy system is the full supply chain that delivers energy to people. And optimization models are tools that can be used to search for the least expensive ways to plan, maintain and operate energy systems in order to meet energy demand while complying with existing laws and regulations.”
“The optimization model we used for this work was designed to focus on electrical power generation,” says Johnson. “We were able to look at energy supply and demand on an hourly level for 26 regions of the power grid, covering the lower 48 United States.”
One key finding from the optimization model is that increased demand will lead to increased carbon dioxide emissions from electricity generation, by up to 28% over the next three and a half years.
“The power sector has made progress in reducing carbon emissions over the past 20 years, but the increased demand will essentially erase a lot of that progress,” says Johnson.
“We also found that electricity costs will increase by an average of 6%-29%, nationally. However, those prices could increase as much as 57%, depending on where you are in the country.”
Those electricity price increases would be most pronounced in Virginia, eastern North Carolina, Pennsylvania, Maryland, Delaware, New Jersey, west Texas, Ohio, West Virginia and New York.
“But those future price increases depend on where new data centers are built,” Johnson says. “For example, price increases in Virginia jump due to substantial expansion of data centers. If the data centers are distributed more broadly across the country, Virginia won’t be hit as hard. Prices will still go up for everyone, but the expense will be spread more evenly across the country.
“There is a great deal of uncertainty regarding the cost of installing new natural gas turbines and the cost of natural gas itself,” Johnson says. “But regardless of fuel cost and the cost to build new natural gas plants, we still see substantial increases in electricity cost and CO2 emissions.
“The public and policymakers need to be aware of these near-term challenges – 2030 is less than four years away,” says Johnson. “Our findings highlight the need for regulators and utilities to make informed decisions about near-term power generation, and for government officials at all levels to make informed decisions related to the construction of data centers.”
The paper, “Power System Costs and Emissions from Data Center and Cryptocurrency Mining Expansion in the United States,” is published open access in the journal Environmental Research Letters. The paper was co-authored by Cameron Wade of Sutubra Research; Michael Blackhurst of the University of Pittsburgh; Joseph DeCarolis and Paulina Jaramillo of Carnegie Mellon University; and Daniel Posen of the University of Toronto.
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Note to Editors: The study abstract follows.
“Power System Costs and Emissions from Data Center and Cryptocurrency Mining Expansion in the United States”
Authors: Jeremiah X. Johnson and Anderson R. de Queiroz, North Carolina State University; Cameron Wade, Sutubra Research; Michael Blackhurst, University of Pittsburgh; Joseph F. DeCarolis and Paulina Jaramillo, Carnegie Mellon University; and I. Daniel Posen, University of Toronto
Published: May 12, Environmental Research Letters
DOI: 10.1088/1748-9326/ae6c3d
Abstract: Rapid growth in electricity demand from data centers and cryptocurrency mining could significantly alter the trajectory of the United States’ power sector. We use an energy system optimization model to evaluate how projected demand through 2030 may influence electricity generation, power infrastructure investment, emissions, and costs under a range of scenarios. We model power sector capacity expansion and dispatch decisions across 26 interconnected power regions, incorporating policy constraints and spatial variation in renewable resources and transmission infrastructure. We find that data center and cryptocurrency demand could increase 2030 power sector CO2 emissions by up to 28% relative to a future with no data center growth, driven by increased generation from natural gas and coal plants. Regional effects vary substantially: coal-fired generation rebounds to meet demand in Northern Virginia, while Texas accommodates growth primarily through natural gas generation. Electricity costs, as measured by demand-weighted locational marginal prices, rise by up to 57% in some regions, with a national average increase of 6% to 29% across the modeled scenarios. Outcomes are highly sensitive to natural gas prices. Lower natural gas prices are associated with lower emissions before considering data center demand (with natural gas displacing coal), but result in large incremental emissions attributed to data centers as coal power utilization increases to meet the increased load. In contrast, higher natural gas prices shift a greater share of new demand toward cost-competitive renewable resources, thereby moderating emissions impacts. Reinstating federal incentives for renewable electricity would dampen both the cost and emissions attributable to data center demand. Distributing new data center and cryptocurrency demand more broadly across the grid reduces regional price spikes, but has little effect on national average electricity costs. Overall, these findings highlight the need for proactive planning and targeted policy to ensure that growing data center electricity demand does not strain efforts to achieve near-term climate and affordability goals.
