Electricity prices aren’t going to get cheaper anytime soon. Goldman Sachs analysts say the surge is being driven by soaring demand from AI-focused data centers, while the power supply remains tight. In 2025, electricity costs rose 6.9% year over year, more than double the 2.9% inflation rate, the bank’s researchers report. They expect prices to keep climbing through the end of the decade, with data centers responsible for about 40% of the growth in electricity demand. That will squeeze households’ budgets, dampen consumer spending, and modestly slow overall economic growth in the coming years.
Households could face another roughly 6% increase in electricity prices through 2027. After that, inflation from electricity is projected to ease to about 3% in 2028, helped by lower natural gas prices. Goldman also expects consumer spending growth to drop by around 0.2 percentage points through 2027 and for economic growth to be about 0.1 percentage point lower, driven by higher energy costs.
However, the exact price path will vary widely across regions, depending on local market structures and regulatory choices.
A Goldman analyst, Manuel Abecasis, notes that lower-income households will feel the effect more acutely because electricity takes up a larger share of their budgets. Areas with more data centers will see bigger impacts.
Higher electricity prices are also expected to nudge core inflation upward by about 0.1% through 2027 and by roughly 0.05% in 2028 as businesses pass higher costs to customers.
The rapid expansion of data centers is colliding with a constrained electricity supply. Regulatory hurdles, along with labor and material shortages, make building new power plants difficult. This tight supply-demand balance is likely to push wholesale electricity prices higher, especially in California, the Midwest, and the Mid-Atlantic.
Utilities will need to invest more in infrastructure to meet demand, and those costs are expected to flow through to consumers. The AI sector’s role in electricity price inflation has become a political flashpoint ahead of the midterm elections. Governors in New Jersey and Virginia benefited in 2025 from campaigns promising to curb utility bills, while national figures weigh how AI-related costs should be shared.
On the corporate side, Washington recently saw moves to push tech companies to fund new power plants for the nation’s large electric grid. In PJM, the grid that serves 13 states across the mid-Atlantic and Midwest, data-center demand has pushed up the cost of securing power, with watchdogs estimating that data centers account for about $23 billion in related costs that ultimately land on consumers. Critics call this a major wealth transfer, a concern underscored in recent filings with PJM.
