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The rapid expansion of AI and cloud computing is set to transform America’s power system—and could leave households paying higher electricity bills in the process.
A new BloombergNEF (BNEF) analysis projects that U.S. data centers will consume roughly 20 percent of the nation’s electricity by 2035, up from 5.9 percent today and approximately 12 percent by 2030, highlighting the enormous energy demands being driven by AI development.
The report estimates that data-center power demand could reach 194 gigawatts by 2035, the equivalent of the output of nearly 200 traditional nuclear reactors and 83 percent higher than BNEF’s previous forecast issued just months earlier.
The question for consumers is whether those growing electricity needs will translate into higher household bills.
Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative, told Newsweek that the answer depends largely on how regulators allocate the costs of new infrastructure.
“Industry rules that determine how new infrastructure costs are shared by ratepayers do not force data centers to pay for new power lines and power plants that are being built for them,” Peskoe said. “Regulators can and should fix the utility industry’s methods for spreading infrastructure costs.”
“Yes. Absolutely,” he said when asked whether data center operators should pay the full cost of grid upgrades and new infrastructure needed to serve their facilities.
He also argued that greater competition could reduce potential impacts on consumers. In many states, large customers must purchase electricity through their local utility, but allowing data centers to contract directly with private power producers could prevent costs from being spread across other ratepayers.
Why Electricity Prices Are Rising
The prospect of higher electricity bills stems from a simple economic reality: data centers are driving demand growth at a pace utilities have not faced in decades. The largest AI campuses require power on a scale comparable to that used by entire cities.
According to BNEF analyst Lloyd Arnold, by 2035, “one unit of energy out of five” generated in the United States could be going to data centers rather than homes, businesses, electric vehicles or other uses.
Economists and energy experts generally agree that when demand rises faster than supply, prices increase. Utilities across the country are already being forced to invest in new transmission lines, substations, power plants, and grid infrastructure to accommodate the incoming wave of AI-related development. Those costs are often recovered through customer electricity bills.
The Edison Electric Institute has said its member companies are projected to invest nearly $208 billion in 2025 to strengthen and expand the electric grid, while utilities sought tens of billions of dollars in rate increases during the year.
What It Could Mean for Household Bills
The exact impact on consumers will vary by state, utility, and regulatory decisions. However, several recent analyses suggest upward pressure on electricity bills is likely to intensify as AI demand grows.
Evidence that these pressures are already emerging can be seen in the PJM Interconnection region, which serves roughly 67 million people across 13 states and Washington, D.C.
In July, PJM said that “demand for electricity continues to grow faster than electricity supply” after its latest capacity auction fell 6,831 MW short of its reliability requirement. PJM and its independent market monitor have identified rapid data center growth as a major driver of rising electricity demand.
According to Monitoring Analytics, PJM’s independent market monitor, data-center-driven demand accounted for roughly $6.3 billion of the $16.4 billion in capacity charges, costs that are ultimately recovered from electricity customers across the PJM region.
Peskoe has said there is already evidence that consumers are helping absorb costs associated with growing data-center demand.
He pointed to PJM Interconnection, where capacity market costs have surged in recent years and said: “Data centers have caused half of this total cost, but the entire region pays for it.”
Joe Bowring, president of Monitoring Analytics, told Industrial Info Resources that “this is not something the data centers are actually paying themselves,” adding that “this is a cost being imposed on all customers in the PJM footprint.”
PJM customers have already experienced substantial increases in electricity costs tied to tightening supply and rising data-center demand. Since 2024, PJM auctions have added an estimated $29 billion in utility costs.
If data centers account for one-fifth of all U.S. electricity consumption by 2035 as BloombergNEF forecasts, consumers could face continued upward pressure on electricity bills as utilities recover the costs of new generation and grid infrastructure.
While no definitive nationwide forecast exists for household bill increases by 2035, estimates from regional grid operators and consumer groups suggest the impact could range from billions of dollars in additional annual electricity costs to tens of dollars per month for some households in heavily affected regions, particularly in states with large concentrations of data centers such as Virginia and Texas.
Who Will Be Hit Hardest?
The effects are likely to be most noticeable in states with large concentrations of data centers.
Virginia, already home to the world’s largest data-center hub, is expected to remain at the center of the AI infrastructure boom. Texas is also anticipated to see outsized growth.
BNEF said data centers’ share of electricity consumption would be significantly above the national average in both states.
Northern Virginia’s “Data Center Alley” and Texas’s ERCOT region are already experiencing substantial growth in electricity demand, prompting concerns about grid reliability, transmission costs and future rate increases.
The Debate Over Who Pays
Peskoe argues that the key policy question is not whether the grid will need new infrastructure, but who will ultimately pay for it.
“The utility business model is to socialize infrastructure and energy costs,” he said. “That has worked well when growth was spread across residential and business sectors. Now, in many states, growth is largely due to data centers.”
Consumer advocates argue that households could end up subsidizing infrastructure built primarily to serve large technology companies.
Technology companies and industry groups, meanwhile, argue that data centers generate investment, tax revenue and jobs while accelerating the development of new energy resources. They also contend that many projects are increasingly pursuing dedicated power supplies and other arrangements designed to reduce impacts on existing customers.
While the scale of future bill increases remains uncertain, BNEF’s forecast underscores the magnitude of the challenge ahead.
If data centers account for one-fifth of all U.S. electricity consumption by 2035, utilities will need unprecedented levels of generation and grid investment—costs that could become a key factor in determining how much Americans pay to keep the lights on over the next decade.
Contact Newsweek editors on this story: Ben Kelly and Cristina Diciu.
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