The analysis was based on the expectation that among the nation’s power grids, it will be ERCOT and PJM that will experience the fastest short-term demand growth due to data center development.
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Potentially rapid data center load growth could drive up wholesale electricity prices and shift the generation mix inside ERCOT by next year, according to an analysis from the federal Energy Information Administration.
Those findings, which were included in an EIA analysis released earlier this month, were drawn by examining a hypothetical scenario in which demand growth occurs more quickly than expected because of data center development, but future generation capacity holds to previously projected levels.
The analysis also was based on the expectation that among the nation’s power grids, it will be ERCOT and PJM that will experience the fastest short-term demand growth due to data center development.
The potential data center effect on the nation’s power grids is important. “If demand were to grow faster than supply, the stresses on the grid would be evident in spikes in wholesale power prices or even periods of rolling blackouts,” the EIA stated in its analysis.
The Analysis
The EIA is the energy data collection arm of the federal government. For the analysis, it developed a hypothetical high-demand growth scenario for 2026 and 2027 in which energy demand growth rates were 50 percent higher than earlier projections to reflect the potential for robust data center development. As a baseline for generation capacity in the hypothetical scenario, the EIA used its Short-Term Energy Outlook (STEO) analysis it published in February — but without changes.
The EIA found that wholesale prices in ERCOT could increase by 79 percent under the high-demand growth scenario. “The 2027 price averaged $37 per megawatt hour higher than the February STEO forecast price,” the EIA noted.
Other Findings:
- The effects from the high-growth scenario would be relatively minor in 2026 — given the ramp up time of the increasing load— but more pronounced in 2027.
- ERCOT’s hourly prices would be particularly high during the late summer months under the hypothetical scenario. That’s because it is during these months that overall wind generation typically decreases during certain hours while electricity demand tends to reach its seasonal peak. “When this occurs, ERCOT needs to rely on the most expensive generators to fulfill demand,” the report stated.
- The isolation of ERCOT from other grids — that is, its limited interconnections to the main Eastern and Western grids — “makes the price response to higher demand more acute,” the analysis concluded.