Yet another piece of AI FUD falls apart:

North Dakota, for example, which experienced an almost 40 percent increase in electricity demand thanks in part to an explosion of data centers, saw inflation-adjusted prices fall by around 3 cents per kilowatt-hour. Virginia, one of the country’s data center hubs, had a 14 percent increase in demand and a price drop of 1 cent per kilowatt-hour. California, on the other hand, which lost a few percentage points in demand, saw prices rise by more than 6 cents per kilowatt-hour.

It seems somebody decided to actually look at whether electricity prices were increasing or decreasing:

a new study from researchers at Lawrence Berkeley National Laboratory and the consulting group Brattle suggests that, counterintuitively, more electricity demand can actually lower prices. Between 2019 and 2024, the researchers calculated, states with spikes in electricity demand saw lower prices overall. Instead, they found that the biggest factors behind rising rates were the cost of poles, wires and other electrical equipment — as well as the cost of safeguarding that infrastructure against future disasters.

It seems that we are getting better at generating power:

Politicians have also been bickering over the extent to which renewables, such as wind and solar power, raise rates. But the new study shows that the costs of operating and installing wind, natural gas, coal and solar have been falling over the past 20 years. Since 2005, generation costs have fallen by 35 percent, from $234 billion to $153 billion.

Transmission...not so much:

But the costs of the huge wires that transmit that power across the grid, and the poles and wires that deliver that electricity to customers, are skyrocketing. In the past two decades, transmission costs nearly tripled; distribution costs more than doubled.

It's almost like the grid build-out of the grid was subsidizing transmission costs over the last decade or two, and now we are having to actually build the transmission infrastructure and it turns out that copper is expensive. The article doesn't put forth this conclusion, but they do say:

Part of that trend is from the rising costs of parts: The price of transformers and wires, for example, has far outpaced inflation over the past five years. At the same time, U.S. utilities haven’t been on top of replacing power poles and lines in the past, and are now trying to catch up. According to another report from Brattle, utilities are already spending more than $10 billion a year replacing aging transmission lines.

On a related note, I saw this in a Bloomberg newsletter:

In a new report, CreditSights analysts led by Andy DeVries crunch the numbers to show that US utilities already appear to be in the process of building twice as much power capacity as is currently forecast to be needed by 2030. In other words, the data center buildout already looks to be outstripping demand for compute.

The Bloombergers do some calculations and:

The result is committed supply (112 GW) that’s about 190% of the forecast increase in net datacenter power demand by 2030 (59 GW) and 108% of the 2035 forecast (103 GW). Put differently, utilities are already building more than twice as much new capacity as is forecast to be needed by 2030.

Interestingly, if you look at the data center buildout from a very simple energy perspective, you see a similar thing. With the vast majority of data centers drawing their power needs from the grid (and with a significant increase in nuclear power not really expected anytime soon), the thing to look at specifically is arguably gas prices. Those haven’t just been falling. The futures curve is now downward sloping over time, suggesting that the energy sector doesn’t seem to be betting on a big spike in future power demand either.

I'm a fan of cheap power, so hopefully we'll just keep on building and figuring out new ways to generate electricity.

archive link to WP article
archive link to Bloomberg newsletter