Rapidly growing electricity demand from data centers, electrification, and other sources can -- under certain conditions -- lower average retail electricity rates while enabling needed grid investments, according to findings released by the Electric Power Research Institute.
EPRI's new white paper, Win Win Watts: When Can Data Centers, Efficient Electrification, and New Loads Lower Electricity Prices?, concludes that new electricity demand can lower average retail electricity prices when the incremental costs of serving new loads are below current average costs, such as in regions with spare capacity or lower-cost new generation options.
Under these circumstances, additional load can:
• Spread system costs across more kilowatt hours
• Improve utilization of new and existing grid assets
• Support deployment of clean energy and emerging technologies
• Enhance system operations and reduce emissions
However, outcomes vary widely by region. Analysis of state-level data suggests that states with higher load growth between 2019 and 2024 generally experienced smaller electricity price increases, or even price declines, while states with flat or falling sales tended to see larger price increases.
On average, a 10 percent increase in load is associated with a 0.6-cent/kWh reduction in prices. Meanwhile, when new load triggers high-cost transmission, distribution, or generation investments, or when new customers do not fully utilize or remain long enough to support those investments, average prices may rise, the paper also found.
"As AI, electrification, and industrial onshoring reshape the U.S. energy landscape, understanding how load growth interacts with system costs has never been more important," said EPRI President and CEO Arshad Mansoor. "This research shows that with planning, pricing structures, and flexible demand, growing electricity needs can support affordability and reliability for all."
The analysis identifies three critical levers that determine whether "win win" outcomes are achieved:
1. Proactive planning that strategically links emerging demand with clean energy and grid investments
2. Rate design and cost allocation that ensure new loads fully cover incremental costs and protect existing customers
3. Demand flexibility, including approaches tested through EPRI's DCFlex initiative, which helps transform data centers into grid assets, capable of reducing peak demand and deferring capital investments
