ELECTRICITY MARKETS AND POLICY
AI, Data Centers, and Energy: Oh My!
Kenneth B. Medlock III CES Senior Director James A. Baker, III and Susan G. Baker Fellow in Energy and Resource Economics
Setting the Scene Today’s discussions in energy have become increasingly dominated by the rise of artificial intelligence (AI), machine learning, datacenters, and the electricity requirements to drive it all. This is running headlong into growing concerns about energy costs and reliability, two issues that have increasingly been at top of mind for consumers and policymakers alike. As indicated in Figure 1, the average price of electricity to residential consumers has increased in every state since 2010, with some states seeing much more dramatic price increases (dark green bars) than others.1 In states where total electricity sales (black dots) are less than in-state generation (red X’s), the prospect of data center-driven demand growth is especially daunting for the future of electricity prices.
Energy Insights 2025
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