Can data centers lead to higher energy prices?

Energy prices for people living in some areas where data centers are constructed increased after the facilities become operational.

An analysis by Bloomberg.com showed that electricity prices increased 267% over five years for energy customers who live near newly constructed data centers.

The report said that wholesale prices have doubled since 2020, mainly in areas near data center hot spots. Of the areas that had price increases, 70% are located within 50 miles of data centers.

The impact on energy prices can vary, however, according to a separate study. If data centers require new power plants or other substantial improvements to the grid, price changes could be more dramatic.

Gemini Data Center SD LLC purchased 160 acres in northeastern Sioux Falls near an existing Xcel Energy substation. The project still requires city approval. Another company is proposing a multi-billion data center in Deuel County.