Hey Jeremy, I read your story this week when it came out. I actually think you're probably *overstating* the impact of data centers on electricity prices. I'm working on a piece that speaks to that.
You write, "One of the key reasons for the rise in electricity prices is the rise in the number of data centers." But this isn't the case.
I wrote about a big LBNL study on electricity prices recently. The study found that a lot of other factors are the primary reason for the growth of electricity prices.
The Bloomberg story that you cited has a lot of problems IMO. They looked at a single month of wholesale electricity prices and compared y/y. Over a longer period, like a year—which is the period that impacts bills—the price increases are much smaller. And wholesale prices are only a third of bills. The trendline over the last decade has actually been declining wholesale prices due to cheap renewables. All the price increases are coming from the other two-thirds (the poles and wires).
At the same time, there's no doubt that for some Americans, data centers are boosting their bills.
I agree with the other point you make in the article about how a failure to build more clean energy is a cause of higher prices. But there are a number of other really important factors that we need to address in order to deliver true affordability.
Ok thank you! I appreciate the sanity check! Truth be told, I shopped this article around beforehand to a few folks and they told me I was _under_ representing the impact of data centers which is why I beefed it up. But yes the more I was pulling back the curtain on more local data (at least at the state level) it appeared the picture was more complex. I thought you captured things well in this article (https://www.distilled.earth/p/why-are-electricity-prices-rising) and your point about Maine, Virginia, and North Dakota really stuck with me (not to mention the natural disasters, war in Ukraine, and crypto mining that is also driving up prices). Maybe I'll go back and edit the web version a bit. More to come and always glad to chat.
Would be curious on your thoughts for this electricity article Michael. Do you think it understates some of the data center pressures? https://americaninequality.substack.com/p/the-electricity-bills-are-too-high
Hey Jeremy, I read your story this week when it came out. I actually think you're probably *overstating* the impact of data centers on electricity prices. I'm working on a piece that speaks to that.
You write, "One of the key reasons for the rise in electricity prices is the rise in the number of data centers." But this isn't the case.
I wrote about a big LBNL study on electricity prices recently. The study found that a lot of other factors are the primary reason for the growth of electricity prices.
https://www.distilled.earth/p/why-are-electricity-prices-rising
The Bloomberg story that you cited has a lot of problems IMO. They looked at a single month of wholesale electricity prices and compared y/y. Over a longer period, like a year—which is the period that impacts bills—the price increases are much smaller. And wholesale prices are only a third of bills. The trendline over the last decade has actually been declining wholesale prices due to cheap renewables. All the price increases are coming from the other two-thirds (the poles and wires).
At the same time, there's no doubt that for some Americans, data centers are boosting their bills.
I agree with the other point you make in the article about how a failure to build more clean energy is a cause of higher prices. But there are a number of other really important factors that we need to address in order to deliver true affordability.
More on all this soon! Appreciate your work.
Ok thank you! I appreciate the sanity check! Truth be told, I shopped this article around beforehand to a few folks and they told me I was _under_ representing the impact of data centers which is why I beefed it up. But yes the more I was pulling back the curtain on more local data (at least at the state level) it appeared the picture was more complex. I thought you captured things well in this article (https://www.distilled.earth/p/why-are-electricity-prices-rising) and your point about Maine, Virginia, and North Dakota really stuck with me (not to mention the natural disasters, war in Ukraine, and crypto mining that is also driving up prices). Maybe I'll go back and edit the web version a bit. More to come and always glad to chat.