The proliferation of data centers across the country and the increasing demand for the energy such centers require is likely driving up consumer utility bills, according to a Bank of America Institute analysis released this fall.
With population and industrial growth in regions like the Southeast also pushing up energy demand, upward pressure on utility bills is likely to continue or worsen depending on the severity of weather this winter, according to David Tinsley, a London-based senior economist at the institute and a contributor to the analysis report.
Data center boom
While it’s difficult to pin down exactly how many data centers have been built or are planned, it’s inarguable their numbers are growing rapidly all over the U.S. and particularly in the South.
Part of that growth is driven by the explosion of cloud computing and interconnected personal devices, but it is also being driven by the rapid development of artificial intelligence systems.
In Southern states like South Carolina where economic incentives and less restrictive permitting have made it more attractive for data center development, billions of dollars have poured in in recent years to build vast server farms.
Earlier this year an investment advisory firm announced it was spending nearly $3 billion to develop a data center in Spartanburg, and in November another multibillion dollar data center project appeared on Spartanburg County Council’s agenda for consideration of tax incentives.
Such projects have caught the attention of consumers and advocacy groups like the Southern Environmental Law Center, which is closely tracking the environmental and economic impacts of data center growth across the South.
Earlier this year, the Southern Environmental Law Center commissioned a study by London Economics International, a global consulting firm, of projected power demand from data center development. One of the study’s key takeaways is projected data center growth and uncertainty over how many will actually get built could drive overinvestment in energy infrastructure to meet demand that may never materialize — costs that are ultimately borne by ratepayers.
Market indicators
This backdrop of the proliferation of data centers formed part of the impetus for the Bank of America Institute analysis.
The analysis was based in part on proprietary data from millions of Bank of America account holders and analyzed by the institute for trends in consumer utility spending.
The report notes account holder utility payments increased nearly 4% during the third quarter of 2025 compared to the same period the previous year. It adds that this increase corresponds to broader increases in energy costs driven by utility investments in increased generation capacity and grid infrastructure.
Tinsley said one of the underlying indicators cited in the report was capacity auctions from the Pennsylvania-New Jersey-Maryland Interconnection region. The PJM Interconnection is a regional transmission organization serving 65 million customers and responsible for electricity dispatch and system reliability across 13 states.
As noted in the report, PJM auction pricing has risen significantly in recent years, from $34 per megawatt-day in 2023-24 to $329 per megawatt-day for 2026-27. Tinsley said the PJM auction pricing is a useful barometer for gauging overall energy market trends in the U.S. and shows clear warning signs prices are likely to continue to go up.
“Those prices have gone up an awful lot,” Tinsley said. “It does seem to us that there’s probably a lot more (increases) to come.”
Regional rise
For boom areas like the Upstate and the Southeast more broadly, Tinsley said other factors are placing additional pressure on energy costs.
Rapid population growth and new housing construction are pushing up demand for residential energy. At the same time, and particularly in South Carolina, commercial and industrial growth are also placing additional demands on gas and electricity capacity.
Tinsley said one of the things constraining an expansion of energy supply in states like South Carolina is limited pipeline capacity for natural gas. This challenge was mentioned by both Duke Energy and Dominion Energy executives when discussing the future of energy supply in South Carolina with lawmakers last year.
As noted in the report, Tinsley said energy prices are also being pushed up by utility company investments in new generation and transmission infrastructure improvements, which tracks with Duke Energy’s requests for rate increases for its Palmetto State customers the past two years.
Tinsley added that the increasing demand for energy is a worldwide problem with many of the same constraints, regardless of country.
“You can’t build out generation capacity overnight,” he said. “Whatever form it takes … there’s supply constraints on things like turbines right now because the whole world’s in the same boat.”
Energy demand, by the numbers
As part of Bank of America Institute and Bank of America Global Research analysis of the link between the proliferation of data centers and increasing energy bills for consumers, researchers noted the following:
- U.S. electricity demand is expected to grow at about 2.5% annually through 2035.
- The percentage of that demand from new data centers is expected to grow proportionately higher over the same period.
